Banking on Crypto: A Deep Dive into Current Crypto Exposure Among Banks

Crypto Assets and Bank Exposure: What the BIS Report Reveals

According to a recent report from the Bank for International Settlements (BIS), it turns out that banks are dipping their toes into the vast ocean of cryptocurrency. Approximately 20% of banks, particularly those hailing from the Western Hemisphere, are reported to have some level of exposure to crypto assets. These findings are based on data from the first half of 2022, so we can’t blame the banks for not jumping into the deep end yet!

Understanding Group 1 Banks

The report focused on 17 Group 1 banks, which are essentially the financial heavyweights with Tier 1 capital exceeding 3 billion euros. Collectively, these banks reported a staggering 2.9 billion euros in crypto-asset exposure and held about 1 billion euros in crypto assets under custody. It’s like watching a toddler try to juggle — you admire the attempt but hope no one gets hurt in the process!

Scouting the Landscape: Regional Insights

Among the banks that reported these figures, a whopping eleven are located in the Americas, while four are strewn across Europe and two others are situated in different corners of the globe. Despite the big numbers, crypto-asset holdings constituted a mere blip on the radar of total bank holdings:

• Prudential exposures account for only 0.013% of total exposures.
• Crypto assets under custody? A staggering 0.005% of total exposures.

Standards for a Shaky Future

In response to the burgeoning interest in crypto, the BIS has decided to play it safe by instituting standards that will limit banks to a maximum of 2% in crypto reserves by 2025. You know, just in case the crypto rollercoaster decides to go off the rails!

Trends and Analysis: What’s Really Going On?

Among all banks surveyed, crypto-asset exposure only represents 0.003% of total exposures. Meanwhile, custody sees a similar tiny slice at 0.001%. Curiously, prudential exposure experienced a 30% uptick over the first half of the year, while custody saw a dramatic decline of 66%. This drop was partly attributed to certain banks exiting the study and the rest falling victim to the rollercoaster of the crypto market.

The Heavyweight Champion: Who’s Holding the Crypto?

Interestingly enough, just one unidentified bank was responsible for a whopping 61.7% of all crypto asset prudential exposure. That’s a bit like finding out that one kid in school has all the marbles! Add to this that four other banks accounted for a combined 35% of the exposure, mostly generated through clearing and trading activities.

In the grand scheme of things, Bitcoin reigns as the heavyweight champion, representing over 40% of the underlying exposure, while Coinbase comes in second at just under 30%. And Ether, poor thing, must settle for a third-place finish with less than 5% of the market share. Next time you’re feeling like a underdog, just remember ETH!