BIS Caps Banks’ Crypto Exposure at 0.01%, Great News for Crypto
According to a recently released report by the Bank for International Settlements, the global banks’ crypto exposure currently stands at around 0.01%. While the numbers seem too low, this is a very promising statistic for the crypto landscape.Â
Bank’s Crypto Exposure at 0.01%
In the most recent report released by the Bank for International Settlements (BIS), stats show that global banks’ exposure to the crypto landscape stands at 0.01%. The BIS is a financial institution run by central banks to encourage international monetary and financial cooperation while serving as the leading bank for Central banks.
On page 102 of the report, under the Composition of Crypto exposures subheader, the report said;
“Total crypto-asset exposures reported by banks amount to approximately €9.4 billion. In relative terms, these exposures make up only 0.14% of total exposures on a weighted average basis across the sample of banks reporting crypto-asset exposures.55 When considering the whole sample of banks included in the Basel III monitoring exercise (ie, also those that do not report crypto-asset exposures), the amount shrinks to 0.01% of total exposures (Graph 2, left panel).”
The report continued to indicate the composition of the cryptocurrencies mainly targeted the banks in question. Among the main ones include Bitcoin(31%), Ethereum(22%), and other products connected to BTC(25%) and ETH(10%). Moreover, other top 20 assets include Polkadot, Ripple, Cardano, Solana, Litecoin, and Stellar.
In addition to standard crypto assets, “Banks also reported, in smaller amounts, a stablecoin (USD coin) and tokenized assets (not shown).”
The Report Is Quite Bullish on Crypto
The new report is good news, especially for the growth and development of the crypto landscape. At the moment, the banking world holds around 0.01%. When talking about the seemingly low percentage, a Redditor called Beyonderr said;
“Yep, I read this report. I think people are underestimating how bullish this report is. I estimate that the total exposure of banks to crypto will increase by a lot relative to 0.01% and this is significant because banks have a ton of money. Just a mere 1% risk would already add over 80 billion to our market cap.”
If the banks continue to take more risks in the crypto landscape, the market’s value will vastly increase. Hence, the 0.01% value is quite remarkable.
However, while the exposure is excellent, it’s relatively centralized at the moment. According to the BIS reports, two banks control over half of the current crypto exposure. Another four banks make up just about 40% of the remaining exposure. Indeed, few banks have opened their doors to the crypto space.
The research involved 19 banks: ten from the American region, seven from Europe, and two from other parts of the world. However, the study also noted that at the moment, it’s impossible to know whether banks have over or understated their crypto asset exposure.
Accordingly, the exposure is currently across different activities, including Crypto holding, lending, clearing, client and market-making services, and custody/wallet/insurance.
Crypto’s Institutional Adoption
The crypto space has been enjoying massive institutional adoption in recent years. Networks like Microsoft, Facebook, Twitter, and others continually involve themselves with crypto. Banks like Deutsche Bank, Capital One, Barclays, Wells Fargo, Citigroup, Credit Suisse, UBS, and Bank of America have, at some point, been connected to the crypto landscape.
