BNY Mellon targets crypto ETF custody post-SAB 121 review

As a seasoned crypto investor with a keen eye for market trends and regulatory developments, I find BNY Mellon’s move towards Bitcoin and Ethereum custody highly intriguing. The potential entry of traditional banking giants into the crypto custodial ecosystem could reshape the landscape, potentially challenging the dominance of established players like Coinbase.


After receiving an exception from a Securities and Exchange Commission (SEC) staff accounting directive, BNY Mellon moved nearer to the custody of Bitcoin and Ethereum.

Based on Bloomberg’s report, it appears that BNY Mellon is preparing to offer cryptocurrency custody services for Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs) on Wall Street. This move follows a favorable review by the Office of the Chief Accountant at the U.S. Securities and Exchange Commission, which brings America’s oldest banking house one step closer to offering custody for crypto ETFs.

The review, apparently giving BNY Mellon an exemption under Staff Accounting Bulletin 121 (SAB 121), implies that the bank is not compelled to treat customer cryptocurrency as a corporate debt. This change in operations might enable conventional banks to custody cryptocurrencies, a service they have had limited access to until now.

Moreover, BNY Mellon’s custody of Bitcoin (BTC) and Ethereum (ETH) for crypto ETFs may potentially disrupt Coinbase’s leading role within the market. Right now, Coinbase manages the digital assets underlying most of Wall Street’s spot crypto ETFs, including those issued by the massive $10 trillion wealth manager BlackRock.

Since 2023, BNY Mellon has expressed an inclination towards the digital asset custody sector. Last January, their CEO, Robin Vince, highlighted digital assets as a component of the company’s future plans during a conference call discussing earnings.

According to Bloomberg’s analysts, the crypto custody market is expanding at a yearly rate of approximately 30%. As of now, it’s estimated to be worth about $300 million. If this growth trend persists, by 2032, the sector could potentially exceed a value of $1 billion, with an additional $90 million added each year to its total worth.

Yet, regulatory oversight could potentially impede BNY Mellon’s advancement and integration into the crypto custodial sector. In a joint letter directed towards the SEC and four other regulatory bodies, lawmakers such as U.S. Representative Patrick McHenry and Senator Cynthia Lummis have raised concerns about private discussions between SEC staff and relevant companies.

It’s likely that the discussions about exemptions under SAB 121 took place during those meetings. However, it remains uncertain if BNY Mellon was granted their review amidst the discussions some lawmakers deemed suspicious.

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2024-09-24 21:55