According to Bloomberg, the SEC's SAB 121 rule requires crypto-related risks to be reflected on the balance sheet, but banks believe this limits their ability to custody digital assets. BNY said that SAB 121 does not effectively solve the problem of banks custodial digital assets.

BNY will continue to communicate with the OCA and other regulators to provide crypto ETP custody services. BNY announced the technical readiness of its digital asset custody infrastructure in 2022, but SAB 121 makes service provision challenging.

An SEC spokesperson said that some brokers and custodian banks have demonstrated that their situations are different from those described in SAB 121, but they still need to ensure that customers maintain ownership of their assets in the event of bankruptcy. BNY manages more than $50 trillion in assets in traditional markets, and there is a strong demand for qualified bank custodians in the market.

BNY supports 80% of SEC-approved Bitcoin and Ether exchange-traded products, and offering crypto custody services will provide customers with an end-to-end solution. The launch of the US spot Bitcoin ETF earlier this year highlighted the opportunities in crypto custody.