BNY Mellon, one of the largest custodian banks in the world, is making significant strides towards offering custody services for Bitcoin and Ether held by exchange-traded product (ETP) clients.
This development follows a review by the U.S. Securities and Exchange Commission (SEC), which did not object to BNY Mellon’s determination that crypto assets held for regulated ETP clients should not be recognized on the bank’s balance sheet.
Key Points:
- SEC Review: The SEC’s Office of the Chief Accountant reviewed BNY Mellon’s approach and did not object to their determination regarding the balance sheet treatment of crypto assets for ETP clients.
- Market Demand: BNY Mellon has noted strong market demand for bank-qualified custodians for digital assets. The bank already supports 80% of SEC-approved Bitcoin and Ether ETPs through its fund services business.
- Regulatory Landscape: The broader regulatory environment for digital assets is evolving, with digital asset regulation becoming a significant issue in U.S. elections.
- Potential Impact: The move into crypto custody services represents a lucrative opportunity, with providers potentially charging up to ten times more than for traditional assets due to heightened security needs.
Competitive Landscape:
- Challenging Coinbase: BNY Mellon’s entry into the crypto custody market could disrupt the dominance of existing players like Coinbase.
- Institutional Shift: This move signals a major institutional shift towards recognizing Bitcoin and other digital assets as legitimate financial instruments.
Future Plans:
- Engagement with Regulators: BNY Mellon plans to continue engaging with regulators to address additional use cases for crypto custody through a “facts and circumstances” process.
- Broader Adoption: The bank’s involvement in crypto custody is seen as a pivotal moment for institutional crypto adoption, further reinforcing the status of digital assets in global finance.
This development highlights BNY Mellon’s strategic positioning to capitalize on the growing demand for secure and regulated crypto custody services, potentially setting a precedent for other financial institutions to follow.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your research before investing in any cryptocurrency.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your research before investing in any cryptocurrency.
