U.S. Banks Empowered Clients with $201 Billion in Cryptocurrency Exposures during 2023
In a significant development, American banks have shown a marked increase in providing cryptocurrency services to clients, according to recent data. This trend comes as the Basel Committee on Banking Supervision published Basel III monitoring statistics for December 2023, which included crypto-asset exposures.
The surge in American banks offering crypto services is noteworthy, but it's the European market that has seen a more dramatic growth. In the second half of 2023, assets under custody in Europe grew by an impressive 49% to reach €5.5 billion ($5.8bn). This growth was consistent with the patterns of the previous period.
Interestingly, the majority of this custody was for spot crypto assets, with only 6% allocated to tokenized assets or Exchange-Traded Products (ETPs). This indicates a strong preference for direct cryptocurrency holdings among European investors.
Across the globe, the majority of custody remains for spot crypto assets. However, the Americas are almost entirely absent from the crypto custody space due to the SEC's SAB 121 accounting rule. This rule has been a barrier for American banks looking to enter the crypto market.
The incoming Trump administration is expected to drop this rule, which could pave the way for American banks to join the growing number of financial institutions offering cryptocurrency services. Banks like JPMorgan Chase, Bank of America, and Citibank have reportedly been preparing for this possibility.
It's important to note that this data was published before the launch of US Bitcoin ETFs, which could further influence the trends in the American market. As the crypto landscape continues to evolve, it will be interesting to see how these developments shape the future of cryptocurrency adoption by banks.
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