As a seasoned researcher with years of experience in the financial sector, I find the recent developments at Bank of New York Mellon (BNY Mellon) particularly intriguing. Having closely followed the evolving landscape of digital assets, it’s clear that BNY Mellon is making a bold move by venturing into Bitcoin (BTC) and Ethereum (ETH) custody services.
Bank of New York Mellon (BNY Mellon) is taking significant steps to initiate custody services for Bitcoin (BTC) and Ethereum (ETH), following a recent exemption granted by the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121.
Previously, as per Bitcoinist’s report from last Friday, BNY Mellon became the pioneering bank to secure an exception, thereby exempting them from categorizing cryptocurrency custody as a liability on their balance sheet.
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.
As a crypto investor, I’m excited to hear that BNY Mellon is edging closer to offering custody services for Bitcoin and Ether invested through Exchange-Traded Products (ETPs), as reported by Bloomberg. This development could potentially bring greater institutional involvement in the crypto market.
This year, the Office of the Chief Accountant at the SEC carried out an assessment and found no issues with Bank of New York Mellon’s decision not to list the safekeeping of cryptocurrencies for regulated exchange-traded product clients as a liability on their financial statements.
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 expressed its plan to collaborate more closely with the SEC’s Office of the Chief Accountant on further applications, using a flexible “case-by-case” strategy. Additionally, the bank has shared that it is already working with financial regulators to offer large-scale custody services for clients investing in cryptocurrency exchange-traded products (ETPs).
Spot Bitcoin ETFs Drive Crypto Custody Opportunities
As a researcher exploring the crypto custody market, I’ve uncovered some fascinating insights. According to my findings, this sector is experiencing a swift expansion, with projections hinting at a potential value of around $300 million and an annual growth rate of approximately 30%. Remarkably, service providers in this field can levy substantially higher fees for safeguarding digital assets compared to traditional securities. These costs could even escalate up to tenfold.
The significant rise in costs is primarily because of the additional security precautions required to safeguard against cyber attacks, which have led to massive financial setbacks throughout the digital assets sector.
BNY Mellon, a financial institution managing more than $50 trillion in assets, is optimistic about the robust interest in bank-qualified custodians specializing in digital assets.
At present, the bank backs up approximately 80% of Bitcoin and Ether exchange-traded products (ETPs) that have been approved by the Securities and Exchange Commission (SEC), via its fund services sector. BNY Mellon’s intention in offering crypto custody is to deliver clients a complete, end-to-end solution encompassing asset storage.
The debut of U.S. Bitcoin ETFs based on spot trading has brought attention to the expanding possibilities within the cryptocurrency safekeeping industry. Notable companies such as BlackRock and Fidelity Investments have amassed substantial wealth in these investments, suggesting the market’s immense potential for growth.
Currently, as I’m typing this, the top cryptocurrency by market cap has climbed to approximately $64,380, representing an almost 2% increase over the past day.
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2024-09-25 07:34