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Banks hold $9B exposure in Cryptocurrency, a study shows

Banks Have $9 Billion in Cryptocurrency Exposure, BCBS shows

Oct 04, 2022
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A study by Basel Committee on Banking Supervision (BCBS) reports BTC and ETH making up almost 90% of reported exposures.

Total cryptoasset exposures reported by world's top banks amount to approximately $9.2 billion, a study published by the Basel Committee on Banking Supervision (BCBS) details.

The study, written by Secretariat of the Basel Committee on Banking Supervision Renzo Corrias and entitled "Banks’ exposures to cryptoassets: a novel dataset", collects granular information on banks’ holdings of cryptoassets from 2018. In particular, out of a larger sample of 182 banks observed by the Basel III monitoring exercise, only 19 banks sent data on cryptocurrencies (10 from the Americas, 7 from Europe and 2 from the rest of the world).

BCBS – an international committee of central Banks and authorities from 27 countries entrusted with the prudential regulation of banks – shows that crypto exposures are relatively small and unevenly distributed across banks. These make up only 0.14% of total exposures on a weighted average basis across the sample of banks reporting cryptoasset, but the amount shrinks to 0.01% of total exposures when considering the whole sample of banks (182) included in the Basel III monitoring exercise. Two banks making up more than half of overall cryptoasset exposures, and four more banks making up just below 40% of the remaining exposures.

The reported cryptoasset exposures are primarily composed of Bitcoin (31%), Ether (22%) and a multitude of instruments with either Bitcoin or Ether as the underlying cryptoassets (25% and 10% respectively) that makes up almost 90% of reported exposures. Other relatively significant reported cryptoassets include Polkadot (2% of reported exposures), Ripple XRP (2%), Cardano ADA (1%), Solana (1%), Litecoin (0.4%) and Stellar (0.4%). Banks also reported, in smaller amounts, stablecoin (USD coin) and tokenised assets.

Half of the reported crypto exposures is related to custody/wallet/insurance and other services, with the rest largely made up of clearing and market making services (46%) and the remaining 4% due to crypto holdings and lending.

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