Banks cryptocurrency exposure is just 0.1%, according to study (cryptocurrency: BTC-USD)

Kanawat TH

According to a recent study by the Basel Committee on Banking Supervision, the main global standard-setter for banking regulation, total cryptocurrency exposures reported by 19 mostly US banks were €9.4 billion ($9 billion), or just 0.14% of the total commitments.

That number shrank to 0.01% across all 182 banks considered for the exercise, including those that had not reported any crypto exposure.

The study was based on a new crypto data collection template that was sent to a number of banks and was intended to support two Committee documents on the prudential treatment of banks’ crypto asset exposures, which it released in June 2021 and June 2022. These two documents relate to the Basel committee’s efforts to tighten the rules that would govern how depositories could enter crypto.

The primary crypto exposures included Bitcoin (BTC-USD) (31%) and Ethereum (ETH-USD) (22%), as well as other instruments based on those tokens (35%), according to the study. The reported risks included a range of crypto-related banking activities such as clearing, lending, custody and market making. Most banks offered crypto custody or wallet services, followed by client trading in cryptos or crypto derivatives.

Given how fast the crypto market is evolving, it’s hard to figure out whether some banks have understated or overstated their crypto exposures.

With this in mind, the study’s findings, “while helpful in providing a broad indication of banks’ cryptoasset activities, should be interpreted with some caution,” the committee warned, also noting that the small number of responding banks did not. t help provide a more complete picture.

Banks of all sizes have increasingly deepened their exposure to the cryptosphere – despite a market downturn – as companies have come to realize that blockchain technologies (not necessarily the underlying crypto) may be “here to stay” amid growing interest and usage.

SVB Finance (NASDAQ:SIVB), customers Bancorp (NYSE:CUBI), Metropolitan Bank (NYSE:MCB), signature bank (NASDAQ:SBNY), Bank of New York Mellon (NYSE:BK), BNP Paribas (OTCQX:BNPQF) (OTCQX:BNPQY) and Leumi (OTCPK:BLMIF) are among the banks that have entered the decentralized finance sector in recent months.

Recall BNY Mellon (BK) was reportedly planning to launch a crypto custody platform later in 2022 that would allow its customers to hold both Bitcoin (BTC-USD) and Ether (ETH-USD) in digital wallets. And French lender BNP Paribas (OTCQX:BNPQF) (OTCQX:BNPQY) recently partnered with Metaco, a Swiss crypto infrastructure company specializing in crypto custody.

In August, the Federal Reserve introduced new guidelines for crypto-focused banks.

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