World’s Largest Banks Are Exposed to $9B in Crypto Asset – Basel Study

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A survey published by the Basel Committee on Banking Supervision and authored by the committee’s secretariat Renzo Corrias shows that the world’s largest banks hold about $9 billion in cryptocurrencies.

Additionally, the study reveals that these banks holding crypto assets may represent just a 0.01% of the BIS members’ Total Risk Exposure. The majority of the exposure is client services which include Bitcoin (BTC) and Ethereum (ETH). 

To enumerate, the crypto assets exposure comprises 31% Bitcoin, 22% Ether, and a mix of Bitcoin and Ether with 25% and 10%, respectively.

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The Basel Committee on Banking Supervision (BCBS) is a committee of supervisory financial institutions authorities. It is a global committee that includes the world’s central bank leaders from different jurisdictions. 

Notably, the study has now taken into consideration new rules that lenders may hold value against digital assets.

The research is targeted toward creating a primary global standard on the “prudential treatment of banks’ [crypto asset] exposures.” Definitely, the result of the research will play a vital role in developing bank policies for crypto assets.

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Is The Basel Bank-Crypto Asset Study Limiting?

Altogether, 19 banks across America (10), Europe (7), and other parts of the world (2) took part in the survey by submitting their crypto assets data.

According to Corrias, all reporting banks are “Group 1 banks, except for three Group 2 banks (of these, two Group 2 banks do not participate in the wider Basel III monitoring exercise and appear to specialize in crypto assets).”

Before now, BCBS had 182 banks in an earlier Basel III monitoring exercise. The current participating banks were only a representation of the former.

From the participating banks, two banks were discovered to hold more than half of the crypto assets. Four other financial institutions hold on to the remaining crypto assets going on to show an uneven distribution of digital assets across the world.  

So far, the banks’ cryptocurrency exposure consists of categories like crypto holdings and lending, clearing and market-making services, and custody/wallet/insurance services. Due to the fact that the banks taken under consideration were only a representation of the total number of banks, it could be said that the research was rather limiting. 

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