The first study on the exposure of banks to cryptocurrencies has just been published by the Basel Committee, and reveals the prominent sectors of activity in the institutional environment. We find that custodial services currently constitute the largest share of business with the banks studied.
The first study on banks’ crypto exposure
the Basel Committee on Banking Supervisionwhich is made up of representatives of central banks and prudential authorities from 28 different countries, has just revealed the first study to assess banks’ exposure to cryptocurrencies.
According to compiled data with 19 of the world’s largest banking institutions, including 10 in America, 7 in Europe and 2 in the rest of the world, the overall exposure of banks to cryptocurrencies would be around 0.01%. The 19 banks surveyed held €9.4 billion in the form of cryptocurrencies, representing an exposure of 0.14%.
Geographical distribution of banks holding cryptocurrencies
Moreover, the document reveals that the assets are held in a very disparate way, since 2 banks among the 19 surveyed alone own more than half of the total cryptocurrencies concerned. The next 4 share 40% of this total, and the other 10% is shared between the remaining 13 banks.
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Bitcoin (BTC) and Ethereum (ETH) largely dominant
The assets held are, not surprisingly, mainly composed of Bitcoin (31%), and Ether (22%). These are followed by Polkadot’s DOT at 2%, Ripple’s XRP also at 2%, then by Cardano (ADA), Solana (SOL), Litecoin (LTC) and Stellar (XLM), in the ‘order. Banks also reported holding a minimal share of USDC stablecoin as well as tokenized assets.
Distribution of cryptocurrencies held by the banks surveyed
The exposures of the banks studied are divided into 3 different sectors : the actual holding of assets, market maker services as well as custodial and insurance services.
We can quickly see that the holding of cryptocurrencies by banks represents only 4.2% of their activity in this sector, which is very marginal. Childcare services form the majority of the 3 activities, with 50.2% of the shares. As we can see on the right-hand side of graph (4) below, a significant proportion of banks reveal that they only offer this service.
Finally, market maker services, comparable to brokerage, represent 45.7% of the activity of these banks. This includes both trading, securities borrowing involving cryptocurrencies and participation in cryptocurrency fundraising (ICO).
Breakdown of sectors of activity on the banks studied
However, this study should be taken with a grain of salt., the latter only concerning a small sample of banking establishments. However, given the growing adoption of cryptocurrencies by institutions, it would be natural for other more in-depth studies to emerge soon.
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Source: Basel Committee
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