BNY Mellon is set to introduce custody services for Bitcoin (CRYPTO:BTC) and Ether (CRYPTO:ETH) targeted at exchange-traded product (ETP) clients.
This initiative follows a review by the Securities and Exchange Commission (SEC), which found no objections to BNY’s stance that these cryptocurrencies should not be classified as balance-sheet liabilities.
The bank clarified that this ruling specifically pertains to its ETP custody clientele.
The SEC’s Staff Accounting Bulletin 121 (SAB 121) typically requires banks to account for crypto assets held in custody on their balance sheets.
BNY Mellon argued that this requirement significantly restricts its ability to offer comprehensive custody services.
In response, the bank is actively pursuing additional regulatory approvals to expand its capabilities in the crypto custody market.
“BNY has engaged, and will continue to engage, its banking regulators to offer custody services to crypto ETP clients at scale,” the bank stated.
As one of the oldest financial institutions, BNY Mellon manages approximately $50 trillion in assets, positioning it among the world’s largest custodian banks.
Currently, banks can charge significantly higher fees for the custody of digital assets compared to traditional ones, creating a lucrative business opportunity.
BNY Mellon is already involved in the ETP sector, supporting a substantial number of SEC-approved Bitcoin and Ether products.
The anticipated launch of additional crypto-related ETPs, including spot Bitcoin ETFs, indicates growing potential in the digital asset arena.
Despite facing regulatory challenges like SAB 121, BNY Mellon appears poised to capitalise on the evolving landscape of cryptocurrency custody services.
An SEC spokesperson noted that some brokers and custody banks have successfully demonstrated their distinct circumstances in relation to SAB 121.
At the time of reporting, the Bitcoin price was $65,069.41, and the Ethereum price was $2,629.75.