U.S. SEC Review Propels BNY Mellon Closer to Offering Crypto Custody for Spot Bitcoin and Ether ETFs: Report

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As a seasoned investor with a knack for spotting trends and a keen eye for opportunities, I find the news about BNY Mellon’s venture into crypto custody services intriguing. With over two decades of experience navigating the complexities of traditional finance, I can attest to the potential goldmine that lies in this new frontier.

Bank of New York Mellon Corporation (BNY Mellon) is moving forward with providing custody services for Bitcoin and Ether belonging to exchange-traded product (ETP) users, as reported by Olga Kharif and Lydia Beyoud for Bloomberg News. This advancement follows an assessment by the U.S. Securities and Exchange Commission’s Office of the Chief Accountant, which did not express any objections to BNY’s decision that cryptocurrencies held on behalf of regulated ETP clients would not be included in the bank’s financial records.

BNY Mellon explained to Bloomberg that this decision is tailored for Exchange-Traded Products (ETPs) only, and doesn’t completely address the difficulties presented by the SEC’s SAB 121 rule. The bank intends to collaborate with regulators on other scenarios using a “facts and circumstances” approach.

The prospect of managing cryptocurrency deposits (custody services) could be highly profitable, as providers might bill up to ten times their usual fees for conventional assets, according to a Bloomberg report. This high pricing is attributed to the enhanced security requirements in the crypto sector, which has experienced significant financial losses due to hacking incidents.

BNY Mellon, managing over $50 trillion in investments as of June 2024, has expressed to Bloomberg that there is a robust market interest for custodians specialized in bank-grade digital assets. Notably, the bank is currently assisting approximately 80% of Bitcoin and Ether exchange-traded products (ETPs) approved by the Securities and Exchange Commission through its fund services division.

Bloomberg’s report additionally discussed the broader regulatory setting, pointing out that digital asset regulation has emerged as a topic of debate during the U.S. elections. The article highlighted differing views from political candidates, with Donald Trump, the Republican nominee, expressing interest in the industry, and Vice President Kamala Harris, the Democratic candidate, advocating for AI and crypto investment under careful regulations.

1) In early January, the debut of U.S.-based Bitcoin ETFs showcased the potential in digital asset custody, as they gathered roughly $58 billion in assets. Similarly, Ether ETFs have garnered more than $7 billion.

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2024-09-24 23:07