NewsletterBNY Mellon Enters Bitcoin Custody Scene As SEC Okays Service: Report
Highlights
- BNY Mellon received the green light to offer Bitcoin custody services.
- The report cited a testimony from a counsel to Sen. Cynthia Lummis.
- This spells a turnaround for institutions looking to offer crypto custody services.
According to a new report, BNY Mellon, the largest custodian bank in the United States, has secured the approval of the Securities and Exchange Commission (SEC) to offer Bitcoin custody services. The bank was identified as an institution exempted from the financial regulator’s rules. This could trigger more institutional investment in the crypto scene should the Commission give the green light to more firms.
BNY Mellon To Offer Bitcoin Custody Services
Financial services company, BNY Mellon has reportedly secured approval from the US SEC to offer Bitcoin custody services. According to a recent Unchained report, the bank was named during a public hearing in Wyoming’s Select Committee on Blockchain, Financial Technology, and Digital Innovation Technology as an institution that received an exemption from the SEC.
Chris Land, a counsel for Sen Cynthia Lummis testified that the way is cleared for the company to provide custody services. “[BNY] is looking to get more involved in the crypto custody business. They had some problems with Staff Accounting Bulletin (SAB) 121, and the SEC has given them some kind of variance from SAB 121 to move forward.”
This could lead to new institutional participation in the market as more traditional companies become custodians. The approval of spot Bitcoin ETFs and related efforts have led to increased institutional appetite. Recently, Bitwise CIO highlighted a new milestone for these Bitcoin ETFs.
SEC Exemptions To Trigger Investments
The financial regulator granted some exceptions to SAB 121 which makes it tougher for institutions like BNY Mellon to provide crypto custody. Paul Munter, SEC Chief Accountant revealed that the Commission granted exception to a bank and brokerage houses without naming any specifically. In August an SEC insider revealed why the Commission eased the rules.
“In the case of the bank, he said, the conditions involved the institution working with a state regulator first to ensure that the crypto assets being custodied would return to the customer in the event of a bankruptcy, and that activity with customers would only comprise institutional custody with sufficient controls in place to manage risk,” the report added.
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