Banks hold $9.2 billion in Bitcoin, Ethereum, Solana and other cryptos

• The total exposure of top global banks to cryptoassets is more than $9.2 billion, of which Bitcoin and Ethereum have a combined share of more than 50 percent.
• Banks’ exposure to crypto assets has been spread across three broad categories of crypto holdings, custody services and crypto wallets and insurance.

The Basel Committee on Banking Supervision (BCBS) recently published a report highlighting the crypto-asset exposure of global banks. The Basel Committee has collected some detailed information about the bank’s holdings of crypto assets.

A total of 19 banks from America, Europe and other parts of the world submitted the data. According to the report, the banks’ total exposure to crypto-assets amounts to a total of 9.2 billion dollars or 9.4 billion euros. Relatively speaking, this exposure amounts to only 0.14 per cent of the total exposure on an average cost basis. Looking at the entire range of banks included in Basel III monitoring, exposure shrinks to just 0.01 percent of total exposure. The report from BIS breaks down the exposure to each of the cryptocurrencies. It notes:

Reported crypto-asset exposures consist mainly of Bitcoin (31%), Ether (22%) and a number of instruments with either Bitcoin or Ether as the underlying crypto-assets (25% and 10% respectively). Together, these account for almost 90% of reported exposures.

Focusing on the top 20 reported cryptoassets by exposure amount, other relatively significant reported cryptoassets include Polkadot (2% of reported exposure), Ripple XRP (2%), Cardano Ada (1%), Solana (1%), Litecoin (0, 4%) and Stellar (0.4%).

The authors of the BIS report stated that the data provided is the most up-to-date data available to them. “As the market for cryptoassets is rapidly evolving, it is difficult to determine whether any banks have under- or overreported their exposures to cryptoassets, and to what extent they have consistently used the same approach to classify any exposures,” the report notes. .

The bank’s crypto exposure distribution across activities

The distribution of the banks’ crypto exposure has been across several activities. This means that these banks have direct as well as indirect exposure to crypto assets. This crypto exposure is grouped into three broad categories.

1. Crypto holdings and lending: This represents direct holdings and investments in digital assets or products with underlying crypto assets. It may also include lending to companies, households and financial institutions with exposure to digital assets.
2. Clearing, client and market-making services: This includes activities involving the trading or clearing of derivatives and futures of crypto-assets. It also involves undertaking securities financing transactions (SFTs) involving digital assets, underwriting ICOs, as well as issuing securities with underlying crypto assets.
3. Custody, wallet, insurance and other services: This includes providing either custody, wallet or insurance services for digital assets. It also includes facilitating client activity for products with underlying crypto assets.

As we can see, the total exposure to crypto assets is still negligible. However, traditional institutions are slowly making a move in the crypto space. There is thus a high chance that the bank’s exposure to crypto assets may grow over time.