BNY Mellon Moves Forward With Bitcoin Custody Services Following SEC Exemption
September 25 2024 - 12:30AM
NEWSBTC
Bank of New York Mellon (BNY Mellon) is making significant strides
toward launching custody services for Bitcoin (BTC) and Ethereum
(ETH), following its recent exemption from the Securities and
Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB)
121. As previously reported by Bitcoinist on Friday, BNY
Mellon is the first bank to receive this exemption, allowing it to
avoid treating the custody of cryptocurrencies as a balance-sheet
liability. BNY Mellon Seeks To Expand Crypto Custody Services The
announcement came to light during the testimony of Chris Land,
general counsel for pro-Bitcoin US Senator Cynthia Lummis, who
confirmed that the SEC had granted BNY Mellon this crucial
exemption. According to a Bloomberg report, BNY Mellon is now
closer to rolling out custody services for Bitcoin and Ether held
by clients of exchange-traded products (ETPs). Related
Reading: SUI Price Sits 40% Below All-Time High As TVL Approaches
$1 Billion The SEC’s Office of the Chief Accountant conducted a
review earlier this year and did not object to BNY Mellon’s
determination that safeguarding crypto assets for regulated ETP
clients should not be recognized as a liability on its balance
sheet. However, BNY Mellon cautioned that this decision does
not resolve the broader issues related to SAB 121, which continues
to restrict banks’ ability to custody digital assets. The
bank indicated its intention to engage further with the SEC’s
Office of the Chief Accountant for additional use cases, leveraging
a “facts and circumstances” approach. The bank stated that it is
actively engaging with its banking regulators to facilitate custody
services for crypto ETP clients at scale. Spot Bitcoin ETFs Drive
Crypto Custody Opportunities Per the report, the crypto custody
market is rapidly expanding, with estimates suggesting it could be
worth approximately $300 million and growing at around 30%
annually. Providers can charge significantly higher fees for
safeguarding digital assets compared to traditional securities,
with costs potentially reaching up to ten times more. This
heightened expense is largely due to the increased security
measures needed to protect against cyber threats, which have
resulted in substantial financial losses across the digital asset
industry. Related Reading: XRP Remains Bullish: Crypto Experts
Unveil Predictions For The Price BNY Mellon, which oversees over
$50 trillion in assets, has expressed confidence in the strong
demand for bank-qualified custodians for digital assets.
Currently, the bank supports 80% of SEC-approved Bitcoin and Ether
ETPs through its fund services business. By offering crypto
custody, BNY Mellon aims to provide clients with a comprehensive
end-to-end solution. The recent launch of US spot Bitcoin
exchange-traded funds has highlighted the growing opportunities
within the crypto custody sector. Major firms like BlackRock and
Fidelity Investments have already accumulated significant assets in
these products, further underscoring the market’s potential. At the
time of writing, the largest cryptocurrency on the market has risen
to $64,380, up nearly 2% in the last 24 hours. Featured image from
DALL-E, chart from TradingView.com
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