Banks’ Crypto Holdings Decline

Banks worldwide held a total of 341.5 billion euros ($368.3 billion) in crypto assets under custody during the second quarter of 2024. However, spot crypto assets now constitute less than 3% of banks’ total holdings, marking a significant decrease compared to previous years, according to data released by the Basel Committee on Banking Supervision (BCBS) on Wednesday.

The BCBS, which sets standards to promote bank stability, collected voluntary and confidential submissions from 176 banks in June 2024, of which 115 are internationally active. Notably, only 29 banks contributed to the reported total. Most banks prefer holding exchange-traded products (ETPs) that track crypto prices rather than direct crypto assets.

In the wake of the collapses of crypto-friendly banks like Signature Bank and Silicon Valley Bank in 2023, global regulators have been closely monitoring the ties between the banking sector and cryptocurrencies. The BCBS had previously advised that banks’ spot crypto exposure should not surpass 2% as of December 2022.

Evidence suggests that banks are adhering to this recommendation, with their exposure to spot crypto holdings decreasing by 44% from 2021 to 2022. As of the June 2024 survey, banks reported that almost no spot crypto holdings remained, measuring at 2.46%, indicating a clear preference for exchange-traded products. The survey noted that approximately 92.5% of banks’ holdings are now in these regulated products, rather than direct crypto assets.

Read more: Blackrock to List Bitcoin ETP in First Crypto Foray Outside of U.S.