Bank of New York Mellon Corp. is now open for crypto business.
BNY Mellon won the approval of New York’s financial regulator earlier this fall to begin receiving select customers’ bitcoin and ether starting this week. The bank will store the keys required to access and transfer those assets, and provide the same bookkeeping services on those digital currencies that it offers to fund managers for their portfolios of stocks, bonds, commodities and other assets.
The move marks an important milestone for traditional banks and their growing acceptance of digital assets as a legitimate market and a source of new business. While many Wall Street executives still question crypto’s potential and aim to tread cautiously until Washington clarifies how the market will be regulated, firms have responded to calls from a growing number of large investment-firm clients to step into their traditional role as intermediaries.
Money managers have long relied on BNY Mellon and other custody banks for an array of vital, if humdrum, back-office functions such as tracking changes to the value of their assets. Founded by Alexander Hamilton more than two centuries ago, BNY Mellon is the world’s biggest custody bank.
Until now, fund managers would have had to custody their digital currencies with a crypto specialist. BNY Mellon said it is the first of the eight systemically important U.S. banks to store digital currencies and allow customers to use one custody platform for both its traditional and crypto holdings.
“We are excited to help drive the financial industry forward,” Robin Vince, BNY Mellon’s president and chief executive, said in a statement.
BNY Mellon unveiled its plans in February 2021 to hold and transfer digital currencies on behalf of investment firms, and has since integrated its crypto custody business into its core accounting platform. The bank is using software developed with Fireblocks to store those digital holdings, BNY Mellon said. And Chainalysis’s software will help the bank analyze and track the path the assets take before they arrive at the bank, it said.
The platform will go live with select investment-fund firms this week. The bank said it expects to expand its crypto custody offerings to additional clients in the future, pending regulatory approvals.
This year’s dramatic selloff in digital currencies wiped out $2 trillion in value, reminding individual investors and deep-pocketed institutions alike of the market’s volatility. The downturn also triggered the collapse of several prominent crypto firms, renewing calls to impose more investor protections on businesses that trade, store and lend digital assets.
