Amid growing demand to address crypto-related risks, the Office of the Superintendent of Financial Institutions (OSFI) launched a consultation on stablecoin regulation.
The federal financial regulator is seeking feedback on the latest recommendations from the Financial Stability Board (FSB) for dealing with the risks posed by cryptoassets that are linked to fiat currencies, which are the most common type of stablecoin.
“While these cryptoassets have yet to achieve mainstream adoption as a means of payment, associated financial activities have the potential to present risks to the financial system,” OSFI said in a letter accompanying the consultation.
A couple of leading stablecoins collapsed last year, resulting in allegations of fraud and other misconduct, and undermining confidence in the sector.
In response to these risks, the FSB has published policy recommendations that would ground regulation in this area on the principle of “same activity, same risk, same regulation.” The recommendations also call for comprehensive supervision and regulation for these assets and the firms that deal in them.
Now OSFI is seeking feedback on those recommendations and whether they adequately address the risks of stablecoins.
The regulator said the consultation signals that it aims to align its future risk management expectations with international recommendations and forms part of the coordinated efforts of federal and provincial regulators to address risks tied to these assets.
The consultation will run until June 16. On May 15, OSFI will be hosting an information session on the issue.