BNY Mellon, one of the world’s largest custodian banks, is looking to offer bitcoin and ether custody services to its exchange-traded product (ETP) clients. The bank is also eyeing large-scale growth in the cryptocurrency space, with plans to seek additional regulatory approval to capitalize on the lucrative crypto custody market.

BNY Mellon Boosts Bitcoin and Ether Custody Services for ETP Clients

Bank of New York Mellon Corp. (BNY Mellon) disclosed to Bloomberg on Tuesday that it is preparing to provide custody services for bitcoin and ether held by customers of its exchange-traded products (ETPs). The move comes after the Securities and Exchange Commission (SEC) Office of the General Accountant did not challenge BNY’s decision that crypto assets should not be recognized as liabilities on its balance sheet.

BNY has clarified that this finding applies specifically to its ETP custody clients. The SEC’s Staff Accounting Bulletin 121 (SAB 121) generally requires banks to account for custodial cryptocurrencies on their balance sheets, but BNY argues that the rule significantly limits its ability to provide such services. BNY is looking to offer its own crypto services and plans to seek additional regulatory approvals to enable large-scale custody services. The bank told the news agency:

BNY has and will continue to work with banking regulators to provide custody services to crypto ETP clients at scale.

The Bank of New York Mellon is one of the largest and oldest financial institutions. As of mid-2024, BNY Mellon oversaw approximately $50 trillion in assets under custody and management, making it one of the largest custodian banks in the world.

Banks can now charge up to 10 times more for custody of digital assets than traditional banks, making the business particularly lucrative. BNY has entered the ETP space, backing a large portion of SEC-approved bitcoin and ether products. The upcoming launch of more crypto-related ETPs, including a spot bitcoin ETF, highlights the growing opportunities for BNY in the digital asset space, despite challenges posed by regulations like SAB 121. An SEC spokesperson stated:

Several brokers and custodian banks have adequately demonstrated to the SEC staff that their actual models differ from those described in SAB 121.

What do you think about BNY Mellon’s decision to offer crypto custody services to ETP clients? Let us know in the comments below.
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