Canadian pension funds to reveal crypto exposure

In a bid to protect citizens’ retirements, the Canadian government will direct regulated pension funds to show their exposure to cryptocurrency. 

Part of Canada’s 2023 budget plan mentioned the need to protect investors from cryptocurrency risks, adding that “there is a clear need for different orders of government to take an active role in addressing consumer protection gaps and risks to our financial system.”

According to the budget plan, recent events that have rocked the crypto industry, such as the collapses of FTX and cryptocurrency-friendly Signature bank, show how crypto can threaten investors’ finances and national security. 

Consequently, the Canadian government is working with the country’s regulators to implement new policies that would safeguard citizens’ savings and pensions. Federally regulated pension funds will have to disclose their crypto exposure to the Office of the Superintendent of Financial Institutions (OSFI)

“To help protect Canadians’ retirements, Budget 2023 announces that the government will require federally regulated pension funds to disclose their crypto-asset exposures to OSFI. The government will also work with provinces and territories to discuss crypto-asset or related activities disclosures by Canada’s largest pension plans, which would ensure Canadians are aware of their pension plan’s potential exposure to crypto-assets.”

Excerpt from Canada’s 2023 Budget Plan

The government’s action comes after some of Canada’s high-profile pension funds were trapped in some fallen crypto companies. In August 2022, Caisse de dépôt et placement du Québec (CDPQ) wrote off its investment in Celsius, which filed for bankruptcy in July 2022.

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Also, FTX’s collapse in November 2022 affected the Ontario Teachers’ Pension Plan, which saw the value of its investment in the crypto exchange become almost worthless. 

Canada increases crypto regulatory oversight 

Canada has recently adopted more stringent regulatory oversight over the crypto industry. As previously reported by crypto.news, the Canadian Securities Administrators (CSA) updated cryptocurrency regulations to include the prohibition of margin trading offering to Canadian users. 

The CSA also said that digital asset companies operating in Canada would need to obtain approval before allowing customers to deposit or buy stablecoins. These companies will have to meet specific criteria before getting approval, which includes ensuring that the stablecoins are backed by fiat. 

The CSA further stated that it would not consent to Value Referenced Crypto Assets (VRCAs) — a term the regulator used in place of stablecoin — which have an algorithmic peg rather than being backed by a solid reserve. 

Read more: Canada to Consult on Cryptocurrencies, Stablecoins, and CBDCs