The Canadian federal government is set to join forces with provincial and territorial authorities in a bid to enhance the transparency of pension plans in the country. The collaborative effort aims to require regulated pension plans to disclose their exposure to cryptocurrency assets to the Office of the Superintendent of Financial Institutions (OSFI).

Government Proposes Quarterly Reporting for Pension Plans’ Crypto Holdings to Mitigate Investment Risks

The proposed measure is aimed at increasing transparency and oversight in the rapidly evolving digital currency landscape, which has seen significant growth in recent years. According to the government, the move is necessary to ensure that pension plans are adequately prepared to manage the risks associated with investing in crypto-assets, given their highly volatile nature.

The new rules would apply to all federally regulated pension plans, including defined benefit plans and defined contribution plans, and would require them to provide quarterly reports detailing their holdings of cryptocurrency assets. The reports would also include information on the valuation of these assets and any associated risks.

The government’s proposal comes at a time when the use of cryptocurrency in retirement savings plans is becoming increasingly common, with many investors looking to diversify their portfolios and capitalize on the potential gains offered by digital assets. However, with the crypto market known for its wild price swings and lack of regulation, there are concerns that pension plans could be exposed to significant financial risks if they are not properly managed.

By requiring pension plans to disclose their exposure to crypto assets, the government hopes to provide greater transparency and oversight in this area, ultimately helping to safeguard the retirement savings of Canadians.

The collaboration between the federal government, provinces, and territories is intended to ensure that Canadians are well-informed about the potential risks associated with investing in crypto-assets through their pension plans. Under the proposed budget, the government would work with these stakeholders to establish clear guidelines for reporting and disclosing crypto-related activity by the country’s top pension plans.

This would include working with pension plan administrators to establish clear reporting requirements and ensuring that these requirements are consistently enforced across all regulated pension plans. The collaboration would also involve sharing information and best practices across jurisdictions to help pension plans effectively manage their exposure to crypto-assets.

The government’s move is part of a broader effort to enhance the regulation and oversight of the crypto sector in Canada, which has seen rapid growth in recent years. By working closely with provinces and territories, the government hopes to provide a more coordinated and effective approach to regulating this emerging sector, ultimately helping to protect the interests of Canadian investors and the stability of the country’s financial system.

National Pension Funds’ Crypto Losses Underscore Need for Greater Oversight

The decision to require federally regulated pension plans in Canada to report their exposure to crypto-assets also comes in the wake of several high-profile bankruptcies and losses suffered by national pension funds that had invested in digital assets. The failures of major crypto exchanges such as FTX, as well as the recent collapses of crypto-friendly U.S. lenders Silvergate Bank and Signature Bank, have highlighted the significant risks associated with investing in this volatile market.

Several national pension funds have already suffered substantial losses from their investments in cryptocurrencies. For instance, Quebec’s Caisse de Depot et Placement disclosed a loss of $150 million on its stake in Celsius Network in 2022. Similarly, Ontario Teachers’ Pension Plan, Canada’s largest pension fund managing around $250 billion in assets, announced in December 2022 that it would write down its entire $95 million investment in FTX.

These high-profile losses have underscored the need for greater transparency and regulatory oversight in the rapidly evolving crypto landscape, particularly when it comes to retirement savings plans. The proposed reporting requirements are aimed at providing Canadians with a clearer understanding of the risks associated with investing in crypto-assets, ultimately helping to safeguard their retirement savings.

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