Basel Committee Report on Bank Cryptocurrency Assets Exposures
Recently, the Basel Committee on Banking Supervision released an analysis detailing the involvement of banks in cryptocurrency assets like Bitcoin, Ethereum (ETH), and XRP. A shocking revelation resurfaced when data showed that total cryptocurrency exposures reported by banks stood at approximately €9.4 billion.
Banks and Cryptocurrency Exposures
Out of the 182 banks included in the Basel III monitoring exercise, only 19 banks reported their cryptocurrency assets. A small portion accounting for 17.1% of total risk-weighted assets (RWA) and 20.9% of the overall leverage ratio exposure measure (LREM). With banks from the Americas contributing to approximately three-quarters of these amounts.
The €9.4 Billion in cryptocurrency holdings represent a mere 0.05% of total exposures, and when extended to the entire sample of banks, the percentage further reduces to 0.01%
Bitcoin, Ethereum (ETH), And XRP Top The List
The data revealed that Bitcoin (BTC) accounted for 31% of the exposures, followed by Ether at 22%. A variety of instruments based on Bitcoin (BTC) or Ether constitute 35% of the exposures. Bitcoin (BTC) and Ether-related instruments make up almost 90% of reported exposures, while other notable digital currencies likewise made it into the banks’ portfolios.
Categories of Cryptocurrency Activities
The report categorizes the cryptocurrency activities of banks into 3 broad groups including ‘ Cryptocurrency holdings and lending,’ ‘Clearing client and market-making services,’ and ‘Custody/wallet/insurance and other services.’ Custody, wallet, and insurance services account for half of the reported cryptocurrency exposures, while clearing and market-making services make up another 46%.
At the time of publication, the XRP price stood at $0.6094.
Hot Take: Basel Committee’s Report Reveals Surprising Bank Cryptocurrency Assets Involvement
In a revered analysis, the Basel Committee on Banking Supervision uncovered banking institutions’ digital currency involvements. The €9.4 Billion in cryptocurrency holdings were a shocking revelation considering they made up a mere 0.01% of the total bank exposures. This report is an essential aspect of understanding institutional involvement in the cryptocurrency industry.
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