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Bank of New York Mellon Corp. has successfully navigated SEC regulations to begin offering custody services for Bitcoin and Ether, held by exchange-traded product clients. This development comes after the SEC’s Office of the Chief Accountant did not oppose BNY’s view that these crypto assets need not be treated as balance-sheet liabilities. This decision could potentially unlock a lucrative business area for BNY, which has been in technical readiness for digital-asset custody since 2022.
The ruling allows BNY to bypass the stringent SAB 121 rule, which has restricted many banks from offering crypto custody due to heightened balance sheet requirements. BNY plans to continue working with the SEC and other regulators to expand these services, enhancing the security and appeal of crypto investments. Such custody services are seen as vital, with providers able to charge significantly higher fees due to the increased need for security.
With over $50 trillion in traditional assets under management and supporting 80% of SEC-approved Bitcoin and Ether products, BNY’s move into crypto custody is set to stir more competition among U.S. ETF custodians. This strategic expansion meets strong market demand for bank-qualified custodians in the digital asset space, signaling a robust future for crypto custody services.
