BNY Mellon has joined a consortium of banks that are collaborating to develop a platform to support the entire lifecycle of digital assets. The collaboration includes other big-name U.S. banks that are gradually entering the industry.
The collaboration follows an announcement by BNY Mellon in February 2021 that it would build a new digital assets unit. This includes multi-asset custody for traditional and digital assets. Now, the oldest bank in the United States is expanding further in the space, while other established financial services providers are also taking action.
Consortium of major U.S. banks
BNY Mellon is now making its expertise available to the consortium to build the Pure Digital Market interbank marketplace. The major U.S. bank will work closely with Pure Digital and the other banks to establish a new front-to-back office solution for trading digital assets.
"BNY Mellon is pleased to be working with Pure Digital and other consortium members to explore new digital asset servicing solutions for our clients as the regulatory landscape develops. Digital assets are only going to become more embedded in global markets in the years ahead." - Jason Vitale, Global Head of Foreign Exchange at BNY Mellon
BNY is expected to play a critical role in determining the optimal structure for the platform. After all, the collaboration is in line with BNY Mellon's broader strategy to develop comprehensive crypto services for clients. This includes the entire trading lifecycle in addition to custody.
A Pure Digital initiative
Pure Digital is a fully automated OTC market for digital currencies with high throughput and physical delivery to bankable custodians. Institutional participants will trade on the platform using bilateral credits, enabling counterparty control for all trading participants and creating a significant increase in efficient capital utilization.
"Given the ever-growing customer interest and demand in the digital currency space, it is only natural that a leading first-mover bank like BNY Mellon supports our initiative. We look forward to working closely with BNY Mellon's digital team." - Campbell Adams, founder of Pure Markets
The final platform - subject to regulatory approval - will leverage Pure Digital's FX trading infrastructure and provide users with stability, security, transparency, as well as capital efficiency. In addition to BNY Mellon, second oldest U.S. bank State Street has also partnered closely with the company.
U.S. banks picking up the pace
The Bitcoin rally over the past year has put pressure on some Wall Street banks to consider diversification into the emerging asset class. Morgan Stanley was one of the first major banks to offer its high-net-worth clients access to 3 different Bitcoin funds. Goldman Sachs also noted that many of the major cryptocurrencies are unique and rightly occupy their specific niches in the market. Thus, the bank reopened its crypto trading desk in March.
Along with the IPOs of crypto service providers Coinbase and Circle, the United States is gradually catching up with the international industry. Meanwhile, infrastructure exists that can soon provide millions of banking customers with access to bitcoin trading. This was made possible in part by stronger efforts on the part of regulators and established financial service providers.