The Bank for International Settlements (BIS) cited the concentration of crypto assets in banks as one of the reasons for the 2023 banking crisis. At the end of June 2022, banks had $4.2 billion in direct exposure to crypto assets.
Signature Bank, the BIS argues, failed to perceive the risks of relying on crypto industry deposits, which disadvantaged it during the crypto collapses of 2022. It also did not have enough liquidity to satisfy outflows from non-crypto depositors spooked by the liquidation of Silvergate.
BIS ‘Proactive Intervention’ Could Overreach
According to the BIS, the failure of Silicon Valley Bank (SVB), which held cash reserves backing Circle’s USDC stablecoin, can be attributed to two factors. Its risk policies failed to match the growth of its asset base, and its management did not notice any problems with how the business ran or its balance sheet strategies.
Its management also allegedly treated supervisory interventions as compliance exercises rather than opportunities to self-evaluate. Before failing in March, the bank had 31 open supervisory inquiries looking into different aspects of its business model and risk approach.
Going forward, the BIS recommends regulators embrace a holistic approach that combines rules with proactive intervention when necessary. This approach, however, has legal risks since banks may re
Go to Source to See Full Article
Author: David Thomas
Tip BTC Newswire with Cryptocurrency
Donate Bitcoin to BTC Newswire
Donate Bitcoin Cash to BTC Newswire
Donate Ethereum to BTC Newswire
Donate Litecoin to BTC Newswire
Donate Monero to BTC Newswire
Donate ZCash to BTC Newswire
