Banks around the world reduced their to certain cryptocurrencies by 43.6% over the past year, the Bank for International Settlements (BIS) said on Tuesday.

Total exposure to cryptocurrencies — both directly in cryptos and through derivatives — fell from 61.7% in 2021 to 15.4% in 2022, a Basel Committee on Banking Supervision (BCBS) report showed. The change in banks' crypto exposures was mainly due to fewer banks responding to the BIS survey, but also other factors such as market conditions and banks potentially reducing their exposures due to the BCBS's global crypto banking rules the report. The sample of banks involved decreased from 182 banks to 126 banks.

Not only has the crypto market endured a severe crypto winter fueled by the collapse of major like crypto lender Celsius and crypto exchange FTX, resulting in millions fleeing the crypto market within a year wiped out, but regulators have also tightened their oversight, which has encouraged a contraction in crypto activity.

The BCBS, which sets global rules for banks, endorsed rules last December that stipulated that a bank's exposure to certain cryptos cannot exceed 2%. The committee also suggested that crypto holdings should be capped in June earlier this year.

The deadline for implementing the BCBS's proposed crypto banking rules is 2025, but this data banks are already taking action.

Looking at total exposure in the Basel III monitoring exercise, the share of crypto exposure “shrinks to 0.003% and 0.001% of total exposure, respectively,” the report said.

See also  Harris Poll Report Finds 71% of Crypto Investors Believe They Will Become Billionaires – Bitcoin News

By Rebecca French

Rebecca French writes books about Technology and smartwatches. Her books have received starred reviews in Technology Shout, Publishers Weekly, Library Journal, and Booklist. She is a New York Times and a USA Today Bestseller...