With the launch of a designated custody platform, the oldest bank in the United States is beginning to safeguard the cryptocurrencies of select customers itself. This makes it the first major U.S. bank to offer its customers traditional investments and digital assets through the same underlying platform.
Recently, BNY Mellon received approval from the New York Financial Services Authority to accept Bitcoin and Ether from select clients. The bank will securely store the required keys in its own custody platform for clients. It will also offer the same accounting services for digital currencies that it provides to fund managers for their portfolios of stocks, bonds, commodities and other assets.
A milestone for institutional adoption
The move represents an important milestone for traditional banks and another step in the growing adoption of digital assets as a legitimate asset class. While some Wall Street executives still question the potential of cryptocurrencies, increasing regulation of the space is creating new confidence. This is reflected in the increasing involvement of traditional banks in the States.
A recent BNY Mellons survey underscores the already significant institutional demand for a stable, scalable financial infrastructure that can accommodate both traditional and digital assets. According to the survey, nearly all institutional investors (91%) are interested in investing in tokenized products. Moreover, 41% of institutional investors already hold cryptocurrencies in their portfolios today, and another 15% plan to add digital assets to their portfolios within the next two to five years.
"BNY Mellon touches more than 20% of the world's investable assets and has the scale to reshape financial markets through blockchain technology and digital assets. We look forward to driving the financial industry forward as we begin the next chapter of our innovation journey." - Robin Vince, Chief Executive Officer and President BNY Mellon
BNY Mellon: the world's largest custodian
Founded more than two centuries ago by Alexander Hamilton, BNY Mellon is the largest custodian bank in the world and has worked closely with market-leading fintechs. The company appointed crypto specialists Fireblocks and Chainalysis to integrate their technologies to meet clients' current and future security and compliance requirements for digital assets.
Money managers have long relied on BNY Mellon and other custodians. They provide a number of important back-office functions, such as monitoring changes in the value of their assets. Previously, fund managers had to have their digital currencies held by a crypto specialist. By its own account, this makes BNY Mellon the first of the eight systemically important U.S. banks to hold digital currencies in custody itself, enabling its clients to use a single custody platform for all assets.
