Backgrounder: Draft Guideline on the Capital and Liquidity Treatment of Crypto-asset Exposures (Banking) (2027)

What Changed

• - OSFI is proposing targeted revisions to the existing Capital and Liquidity Treatment of Crypto‑asset Exposures (Banking) Guideline, rather than a wholesale rewrite, in order to better reflect current developments in crypto‑asset markets.
• The draft changes would explicitly recognize cross‑exchange hedging for Group 2a crypto‑assets when the instruments are traded on regulated exchanges of traditional financial assets, allowing more complete offset of positions across exchanges for reg
• Under the proposal, banks’ market‑neutral strategies in Group 2a crypto‑assets would receive capital treatment that more closely reflects actual economic risk, reducing instances where only partial hedge recognition is permitted.
• No change is proposed to the risk weights applied to Group 2a crypto‑assets, meaning existing Group 2a capital charge levels remain intact under the draft revisions.
• No change is proposed to the eligibility of Group 2a crypto‑assets as collateral, so current collateral treatment and related haircuts remain unchanged by this consultation.
• OSFI confirms that its approach continues to be grounded in Basel Committee on Banking Supervision crypto‑asset standards, while being adapted to the Canadian banking context.

Suggested Considerations

• Assess whether your institution currently has, or plans to have, exposures to Group 2a crypto‑assets traded on regulated exchanges of traditional financial assets, and map all related positions, hedges, and trading strategies.
• Review existing market‑neutral and cross‑exchange hedging strategies for crypto‑asset exposures to determine how expanded recognition of cross‑exchange hedges could change risk‑weighted assets, leverage exposure, and liquidity metrics under OSFI’s proposed treatment.
• Perform an impact assessment and scenario analysis comparing existing capital and liquidity requirements for Group 2a exposures under the current guideline versus the proposed cross‑exchange hedge recognition, quantifying potential capital relief or shifts in capital allocation.
• Update internal capital policy documentation, trading desk procedures, and risk‑management standards to incorporate the proposed hedging recognition framework, including eligibility criteria for “regulated exchanges of traditional financial assets,” subject to final OSFI requirements.
• Prepare and submit a consultation response to OSFI by 20 July 2026, highlighting any operational, risk‑measurement, model, or documentation challenges with implementing cross‑exchange hedge recognition and recommending clarifications where needed.
• Engage front‑office, market risk, model risk, treasury, and finance teams to ensure consistent understanding of the revised Group 2a framework and to align product design and trading strategies with the expected prudential treatment.

Key Dates

Who is Affected