According to a new study published by the Basel Committee on Banking Supervision, a supranational organization responsible for setting standards on bank capital, liquidity and funding, 19 of the 182 global banks overseen by the committee reported ownership of digital assets. Together, their total crypto exposure is estimated at €9.4 billion.
For context, this represents 0.14% of the total risk-weighted asset composition of the 19 crypto-proprietary banks surveyed. Taken as a whole, cryptocurrencies represent only about 0.01% of the total risk-weighted assets of the 182 banks under the supervision of the Basel Committee. Two banks accounted for more than half of global crypto asset exposures, while four others accounted for roughly 40% of the remaining exposures. Of the 19 banks that submitted cryptographic data, 10 were from America, seven from Europe and two from the rest of the world.
Reported digital exposures consisted primarily of Bitcoin (31%), Ether (22%), and Bitcoin or Ether-related derivatives (35%). Other notable mentions were Polkadot (2%), XRP (2%), Cardano (1%), Solana (1%), Litecoin (0.4%) and Stellar (0.4%). 50.2% of digital assets held by banks were for custody, portfolio or insurance performance. Another 45.7% was held for clearing and market making. Finally, an estimated 4.2% of crypto in this category was used for lending and borrowing.
The Basel Committee says the findings should be “interpreted with a degree of caution” due to the difficulty in determining whether some banks have under- or over-reported their exposure to crypto assets. The Basel Committee previously recommended that banks limit their exposure to volatile cryptocurrencies to just 1% of their Tier 1 capital with a risk premium of 1,250%.
