Global Banks Reduce Exposure to Cryptocurrencies

03/01/2023 18:03 • Tech Trends • 95 views

It is reported that the Bank for International Settlements (BIS) said on Tuesday that global banks have reduced their exposure to certain cryptocurrencies by 43.6% in the past year.

BIS: Global banks have reduced their exposure to certain cryptocurrencies by 43.6% in the past year

Analysis based on this information:

In recent years, cryptocurrencies have gained immense popularity and market share, with several digital currencies and tokens emerging in the market. However, their volatility and lack of regulation have made them questionable investments for traditional financial institutions. In light of this, the Bank for International Settlements (BIS) reported on Tuesday that global banks have reduced their exposure to certain cryptocurrencies by 43.6% in the past year.

BIS is an organization that serves as a bank for central banks across the globe. As such, it monitors developments and trends in the global financial industry, including the rise of digital assets. The report released by BIS stated that the reduction in exposure to cryptocurrencies by banks was notable, given the significant growth of the cryptocurrency market over the same period.

The report further highlights that varying regulatory landscapes in different countries have affected the approach of financial institutions to cryptocurrencies. For instance, banks in jurisdictions that have taken a more restrictive approach towards cryptocurrencies, such as China and India, have witnessed a more significant decline in their exposure to digital currencies than banks in jurisdictions that have adopted a more liberal approach, such as the United States and Singapore.

Additionally, the BIS report suggests that the overall market capitalization of cryptocurrencies has also played a role in reducing banks’ exposure to these assets. According to the report, the total market capitalization for cryptocurrencies peaked at $830 billion in January 2018, but has since declined to $210 billion as of September 2019. Such fluctuations in market capitalization have made many investors wary of cryptocurrencies.

In conclusion, the report by BIS highlights the waning interest of global banks in cryptocurrencies due to various factors, including regulatory landscape and market volatility. While cryptocurrencies may have seen a surge in popularity and use, they have yet to gain the trust and confidence of traditional financial institutions, which continue to exercise caution in their approach towards digital assets.

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Global Banks Reduce Exposure to Cryptocurrencies

BIS: Global banks have reduced their exposure to certain cryptocurrencies by 43.6% in the past year

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