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Canada’s Financial Regulators Sound Warning on Blockchain and Cryptocurrency-Related Crime

In an effort to protect Canadian consumers, regulators are sounding the alarm over the potential risks posed by blockchain and cryptocurrency-related activities. The Office of the Superintendent of Financial Institutions (OSFI), the Financial Consumer Agency of Canada (FCAC), and the Canada Deposit Insurance Corporation (CDIC) issued a joint statement to federally regulated entities engaged in crypto-asset activities or providing related services.

Regulatory Concerns

The regulators are urging these entities to adhere to existing regulatory requirements and guidance when conducting such activities, citing concerns over:

  • Consumer protection
  • Stability
  • Integrity
  • Privacy
  • Security of the financial system

This statement comes as part of ongoing efforts by the Department of Finance to review Canada’s financial sector legislative framework.

Key Focus Areas

The regulators highlighted several key areas of focus, including:

  • Prudent oversight and regulatory approaches for digital assets such as cryptocurrencies and stablecoins.
  • Compliance with existing federal financial laws and regulations, as well as any guidance issued by federal and provincial agencies.

Consumer Protection

FCAC emphasized the importance of consumer protection, urging entities planning to develop or offer crypto-assets to notify the agency and provide requested information. The agency is also working to ensure compliance with enhanced requirements under the Financial Consumer Protection Framework, which came into effect on June 30, 2022.

Deposit Insurance

CDIC reiterated that crypto-assets are not eligible for deposit insurance protection. CDIC emphasized the importance of clear and accurate disclosure about deposit insurance protection to consumers.

Regulatory Commitment

As the cryptocurrency sector continues to evolve, Canadian regulators are committed to closely monitoring risks and engaging with industry stakeholders to ensure a safe and stable financial system.

“We support the principle that same activity, same risk, same regulation,” said regulators, referencing a key tenet endorsed by the Financial Stability Board. “Entities must clearly understand the risks associated with planned crypto-asset activities and ensure they have been properly addressed.”