Dive Brief:
- BNY Mellon was set to begin receiving clients’ cryptocurrencies Tuesday, the bank announced in a press release. “BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets,” said the bank’s CEO, Robin Vince. “We are excited to help drive the financial industry forward.”
- The bank rolled out a plan in February 2021 to develop a multi-asset digital custody and administration platform to hold, transfer and issue crypto on behalf of asset-management clients. That platform is set to go live with select investment-fund firms this week.
- BNY Mellon within the past month received the New York Department of Financial Services’ approval to start receiving customers’ Bitcoin and Ether, according to The Wall Street Journal.
Dive Insight:
With this week’s development, BNY Mellon becomes the first U.S.-based systemically important financial institution (SIFI) to store digital currencies and allow customers to use one custody platform for traditional and crypto holdings, the bank said. Fund managers, until now, would have had to employ a crypto specialist to keep their digital currencies in custody.
BNY Mellon’s February 2021 crypto announcement prodded the nation’s other SIFIs to quickly lay out their own strategies for the space: Goldman Sachs relaunched its crypto trading desk. Citi and State Street built digital-asset units. Morgan Stanley and Wells Fargo unveiled investment options aimed at wealthy clients. And Bank of America set out to research crypto technology. JPMorgan Chase, to that point, had been offering banking services to crypto exchanges Coinbase and Gemini for about a year.
Banks are pressing ahead with their crypto plans despite a wide-ranging drop in value in the space. Bitcoin’s value, for example, has plummeted from a mid-November high of more than $68,000 to around $19,100 on Tuesday. Crypto firms such as Celsius and Voyager have declared bankruptcy amid lending and liquidity issues. And several crypto executives have resigned from their posts in recent months.
Meanwhile, regulators and lawmakers have scrambled to set policy overseeing digital assets.
BNY Mellon, for its part, said it expects to expand its crypto custody offerings to more clients in the future, provided it continues to win regulatory approval. The bank cited a survey by Celent indicating 41% of 271 institutional investors said they were holding crypto in their portfolios. Another 15% said they likely would within two to five years.
BNY Mellon said it integrated Fireblocks and Chainalysis technology to meet security and compliance requirements.
"We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs,” Caroline Butler, the bank’s CEO of custody services, said in Tuesday’s release.
