According to a recent study by the Bank of International Settlements, the volume of banks worldwide is expected to decrease from €3.0 billion in 2022 to €1.0 billion (US$1.06 billion).
The nearly 66 percent drop in the bank's crypto assets over the past year coincides with a market collapse triggered by a series of high-profile crashes, starting with the May explosion of cryptocurrency exchange Terra (US-USD) blockchain (UST-USD). FTX (FTT-)USD) In November. Bitcoin (BTC-USD), the largest by market value, has fallen nearly 65% for the year, its worst year-to-date decline since 2018's 75% drop.
In addition, the Basel Committee on Banking Supervision, the world's main standard-setting body for banking law, approved new rules late last year that limit banks' exposure to certain cryptocurrencies to 2%. The Bank for International Settlements (BIS) cites the move as another reason investors are interested in cryptocurrencies, although the proposed rules will not come into effect until early 2025.
The total exposure is 0.001% and 0.005%, respectively, for those participating banks that report exposure, excluding those that report exposure to cryptocurrency deposits (but join the broader Basel III monitoring system). It is clear that banks have little influence over crypto, as many regulators are concerned about the financial stability issues associated with crypto-banking.
However, the study found that the bank's total exposure to speculative cryptocurrencies, including exposure to synthetic currencies or derivatives, rose by 30% year-on-year to €2.9bn, which "grew in its crypto-asset base". Top cryptocurrency assets are Bitcoin (BTC-USD), 43%, Coinbase ( NASDAQ: Coin ), 29%, and Ethereum (ETH-USD), 4%.
Silvergate Capital ( NYSE: SI ) has been in the spotlight in recent days after reports that cryptocurrency bank Coinbase Global ( COIN ) and Galaxy Digital ( OTCPK: BRPHF ) were experiencing a movement of institutional clients, including deposit delays. The annual report and its accuracy have been called into question. The latest blow to the industry was reflected in the price of Bitcoin (BTC-USD), which fell by 4.7% to $ 22.36 thousand on Friday afternoon.
Amid prolonged market turmoil, Signature Bank ( NASDAQ:SBNY ) is limiting its digital currency deposits to less than 20% of total deposits. In the latest financial report, in the middle of the first quarter, spot deposit accounts shrank by about $826 million due to the influx of $1.51 billion worth of crypto deposits into the bank.
Other banks that have entered the decentralized finance (DeFi) space include: Goldman Sachs ( NYSE: GS ), SVB Financial ( NASDAQ: SIVB ), Clients Bancorp ( NYSE: CUBI ), Metropolitan Bank ( NYSE: MCB ), Bank of New York. Mellon ( NYSE: BK ), BNP Paribas (OTCQX: BNPQF ) (OTCQX: BNPQY ) and Liumi (OTCPK: BLMIF ).
Earlier (March 3), two of cryptocurrency's biggest supporters in Congress protested the SEC's policy on cryptocurrency liability.
Now read: Investors should view Bank of New York Mellon as an underdeveloped business.