The Bank for International Settlements (BIS) said in its latest BASEL III monitoring that global banks’ exposure to crypto-assets remains negligible and will mostly decline in 2022. report.

According to the report, out of a total of 181 banks that are part of the BASEL III monitoring sample, only 17 banks in Group 1 reported exposure to crypto-assets. Of the 17 companies, 11 are based in the Americas, 4 in Europe and 2 in the rest of the world. The report did not identify the bank in question.

At the end of June 2022, these lenders had a total prudential exposure to crypto assets of €2.9 billion and crypto assets under custody totaling €1 billion.

Prudential exposures are defined as “direct crypto exposures, including synthetic or derivative exposures, that generate credit or market RWA”. This includes directly owned banks. Crypto; Own crypto-related stocks like Coinbase. Trading in crypto or crypto-related assets and commodities. Clearing of crypto-related derivatives.

These banks’ prudent crypto exposures accounted for only 0.013% of their total exposures, while their crypto assets in custody accounted for only 0.005% of their total exposures. When compared to a bank-wide sample size of 181, the percentages drop to his 0.003% and 0.001% of total exposure respectively.

Compared to the end of June 2021, crypto assets in bank custody decreased by 66%, while prudent exposure to crypto assets increased by 30%.

Lack of supervision

According to the report, about 40% of the decline in crypto assets in custody was due to two banks failing to report their cryptocurrency exposure in 2022, with the remaining decline due to the value of cryptocurrencies 2021 bull market. It added that the two banks that did not participate in the surveillance activity were “specialized in cryptocurrency activities.”

clearing, trading, bitcoin

The bulk of a bank’s prudential exposure comes from clearing and trading activity, accounting for 41% and 32% of total prudential crypto exposure, respectively. On the other hand, 10% of the exposure comes from bank holdings and the rest comes from lending to companies with crypto exposure and other activities.

Bitcoin is the leading underlying asset for banks’ prudent crypto exposure, accounting for 43% of the total. By comparison, Ethereum accounts for only 4%, while the stocks and bonds issued by Coinbase account for 29% of the underlying assets.

Posted In: Introduction, Analysis

By Jules

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