Matthew T. Burgoyne
Jul 28, 2023
Matthew Burgoyne, Co-Chair, Digital Assets and Blockchain, spoke to the Toronto Star about the recently issued set of proposed regulations by the Office of the Superintendent of Financial Institutions (OSFI) for how banks and insurance companies should treat cryptoassets. Matt said that banks have been looking for regulatory clarity in order to offer more cryptoproducts to business clients and consumers.
Under the proposed regulations, banks could issue “tokenized deposits,” or deposits backed by a digital registry. They could even issue stablecoins, if the bank sets aside sufficient money to back them up, said Matt.
Stablecoins are a form of cryptocurrency pegged to the underlying value of an asset such as a traditional currency or gold.
In February, the Ontario Securities Commission (OSC) released regulations that stated companies cannot offer stablecoins unless given permission from the OSC or other regulators. The recent announcement from OSFI provided more regulatory clarity.
“Unless it’s backed by a high-quality liquid asset like a deposit, OSFI is saying the bank would have to set aside enough money as though the stablecoin had already lost all of its value,” said Matt. He suggests that banks could then issue stablecoins based on company deposits or the bank’s own money.
As for the benefits of stablecoins, Matt uses U.S.-based investment bank J.P. Morgan as an example. The bank issued “JPM Coins” to help clients “settle” large transactions.
“If you’re doing a large transaction, transferring the money in traditional banking can take a lot of time. With tokenized deposits or stablecoins, it would be almost instant,” said Matt.
Read the full article published by the Toronto Star.