According to a new study published by the Basel Committee on Banking Supervision, a supranational organization responsible for setting capital, liquidity and financing standards for banks, 19 of the 182 global banks supervised by the organization declared they own digital assets. Together, their total exposure to cryptocurrencies is estimated at €9.4 billion.
In context, this represents 0.14% of the total risk-weighted asset composition of the 19 crypto-holding banks surveyed. Taken as a whole, cryptocurrencies only make up about 0.01% of the total risk-weighted assets of the 182 banks under the supervision of the Basel Committee. Two banks accounted for more than half of total crypto asset exposures, while four others comprised roughly 40% of the remaining exposures. Of the 19 banks that submitted data on cryptocurrencies, 10 were from the Americas, seven from Europe, and two from the rest of the world.
Declared digital exposures consisted mainly of Bitcoin (31%), Ether (22%) and derivatives of Bitcoin or Ether (35%). Other notable mentions were Polkadot (2%), XRP (2%), Cardano (1%), Solana (1%), Litecoin (0.4%) and Stellar (0.4%). 50.2% of digital assets held by banks were for custody, investment, or insurance returns. Another 45.7% was held for clearing and market making. Lastly, an estimated 4.2% of cryptocurrencies in this category were used for lending and borrowing.
The Basel Committee states that the findings should be “interpreted with some caution” due to the difficulty of determining whether some banks have underreported or overreported their exposures to crypto assets. Previously, the Basel Committee has recommended that banks limit their exposure to volatile cryptocurrencies to just 1% of their Tier 1 capital with a risk premium of 1,250%.
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