Canadian regulator sets rules for crypto at banks

Canada’s financial institutions regulator, OSFI, has published final guidelines on how banks must hold capital and manage liquidity when exposed to crypto. In doing so, OSFI clarifies that tokenised deposits do not differ legally from ordinary bank deposits. Banks therefore do not need to apply for a separate regulatory category to develop blockchain-based deposit products.

In brief:

• OSFI publishes final guidelines for the treatment of crypto by Canadian banks, effective from November 2026 or January 2027.
• Tokenised deposits are legally equivalent to ordinary bank deposits, meaning existing rules are sufficient.
• OSFI makes two targeted changes concerning capital requirements and exposure limits for crypto.

Tokenised deposits fall under existing banking rules

OSFI makes clear that tokenised deposits are not legally separate from traditional bank deposits. This means that existing rules on prudential supervision, technology and risk management continue to apply as normal. Federally regulated banks can develop blockchain-based deposit products without the need for a new regulatory category.

The approach aligns with what OSFI calls a technology-neutral policy: the legal nature of a product determines regulation, not the technology behind it. According to the regulator, this provides room for responsible innovation, while the protection of account holders and the stability of the financial system remain paramount.

Two targeted changes to the capital rules

The new OSFI guideline is based on international standards from the Basel Committee on Banking Supervision and has been adapted to the Canadian market. Following consultation with the sector, OSFI makes two changes compared with earlier versions.

First, the regulator recognises that certain hedging structures via regulated exchanges can be taken into account when calculating capital requirements for so-called Group 2a crypto-assets. Banks can thus limit their risk by holding offsetting positions in the same crypto across different exchanges. Second, derivative positions arising from client-clearing activities are excluded from the exposure limit for Group 2 crypto. After netting, these activities generally carry limited residual risk.

Entry into force in two phases

The guideline enters into force in two phases. Banks with a financial year ending on 31 October will be subject to it from 1 November 2026. For institutions with a financial year ending on 31 December, the guideline takes effect from 1 January 2027.

OSFI says it will continue to monitor developments in the crypto market and adjust the guideline if new insights, market practices or international standards warrant it. The development fits a broader trend in which blockchain is increasingly being used within the traditional financial sector, as seen in initiatives such as credit funds on blockchain and tokenised shares on trading platforms.