ccording to the latest report from the Basel Committee, global bank exposure to crypto is estimated to be 0.01%, with the 19 largest financial institutions holding €9.4 billion in crypto, equating to 0.14% exposure.
The data for the report came from 16 Group 1 banks and three Group 2 banks. Ten of these financial institutions were from the Americas, seven from Europe, and two from the rest of the world.
Given the size and level of expansion of these financial institutions, the report estimates that worldwide publicity would be approximately 0.01% after Group 3 banks are included.
The study acknowledges crypto's exponential increase and keeps reminding us that estimating the true exposure rate is difficult.
Distributions of exposure
The ten Americas banks' crypto assets account for roughly one-third of the total €9.4 billion. The distribution of these banks is also uneven.
Two institutions are responsible for more than half of total exposure, while four account for roughly 40%. The remaining 10% is distributed among 13 banks.
Distribution of tokens
According to the data, the most commonly held assets are Bitcoin (BTC) and Ethereum (ETH). Bitcoin has a 31% exposure among the 19 institutions, while Ethereum has a 22% exposure. Tokens with Bitcoin or Ethereum as underlying value are the third and fourth most held assets, respectively. Tokens based on Bitcoin account for 25% of the total, while tokens based on Ethereum account for 10%.
When the total amount of Bitcoin and Bitcoin-based tokens is calculated, Bitcoin has a 56.1% exposure, while Ethereum has a 32.8% exposure.
Distribution of Activities
Participating banks provide the top three crypto-related functions: holdings and lending, market-making, and custody/wallet/insurance services.
Custody/wallet/insurance and similar services came out on top with 50.2% of the market. This category includes all cryptocurrency custody, wallet, insurance services, and services that facilitate client activity, such as self-directed or manager-directed trading.
With 45.7%, clearing, client, and market-making services came in second place. This category includes all trading activities on customer accounts, clearing derivatives and futures, ICOs, and issuing securities containing underlying assets.
Finally, the holdings and lending category include holding and making investments in crypto assets, lending to entities, and issuance of assets supported by assets on the bank's balance sheet, which was the least preferred activity (4.2%).
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