• Global banks have minimal exposure to crypto-assets, according to the Bank for International Settlements (BIS) report.
• Banks‘ total prudential exposure to crypto-assets totaled €2.9 billion as of the end of June 2022, while their crypto-assets under custody totaled €1.0 billion.
• Prudential exposures are defined as „direct crypto-asset exposures, including synthetic or derivative exposures, that give rise to credit or market RWA.“
Banks’ Exposure To Crypto-Assets
The Bank for International Settlements (BIS) recently released its BASEL III Monitoring report which showed that out of a total of 181 banks that were part of the sample, only 17 Group 1 banks reported any exposure to crypto-assets. Of these 17, 11 were based in the Americas, four in Europe and two in other parts of the world. The total prudential exposure to crypto-assets totaled €2.9 billion as of the end of June 2022 and crypto-assets under custody totaled €1.0 billion. This made up 0.013% and 0.005% respectively, when compared against all 181 bank sample sizes falling to 0.003% and 0.001%.
Decline In Crypto Assets Under Custody
Compared to the end of June 2021; banks’ crypto assets under custody fell 66%, while their prudential exposure grew 30%. It was suggested by BIS that this decline was due to two banks not reporting their crypto exposures during 2022 combined with a general decline in crypto value from 2021’s bull market runout period.
Banks’ Prudential Exposures
Prudential exposures are defined as „direct crypto asset exposures, including synthetic or derivative exposures, that give rise to credit or market RWA.“ This includes a bank directly owning; trading and clearingcrypto or related assets and instruments; and clearing related derivatives. The majority of prudentiaexposures come from clearing and trading activity making up 41% and 32% respectively with direct ownership accounting for 26%.
Lack Of Oversight
It was noted in the report that there is some lackof oversight regarding these activities with 40% being attributedto two banks not participating in monitoring exercises who specializein crypt asset activities..
Conclusion
In conclusion it can be seen from BIS’s BASEL III Monitoring reportthat global bank’s exposuret o crpto assets remains minuscule overall but has grown slightly since 2021 despite major drops in values across most cryptocurrencies at present time