BNY Mellon Secures SEC Approval for Crypto Custody Services

Bank of New York Mellon (BNY Mellon), one of the largest financial institutions globally, has received regulatory approval from the U.S. Securities and Exchange Commission (SEC) to offer custody services for cryptocurrencies, specifically Bitcoin and Ethereum, related to exchange-traded products (ETPs). This landmark decision, announced on September 24, 2024, allows BNY Mellon to avoid treating these digital assets as liabilities on its balance sheet, a significant hurdle that has restricted many banks from entering the crypto custody space.

The SEC granted BNY Mellon an exemption from its Staff Accounting Bulletin 121 (SAB 121), which typically requires banks to recognize customer-held cryptocurrencies as balance-sheet liabilities. This exemption positions BNY Mellon to compete directly with Coinbase, which currently dominates the U.S. spot Bitcoin ETF market. Analysts predict that BNY Mellon's entry could disrupt existing market dynamics and provide institutional clients with more options for crypto asset management.

BNY Mellon's CEO, Robin Vince, has emphasized the bank's commitment to digital assets since early 2023, highlighting a growing demand for secure custody solutions among institutional investors. The crypto custody market is estimated to be worth $300 million and is expanding at approximately 30% annually. As BNY Mellon prepares to roll out its services, it aims to leverage its extensive experience in asset management to cater to the evolving needs of its clients in this burgeoning sector.