BNY Mellon, America’s oldest bank, has edged closer to a breakthrough in digital asset ETF custody after a regulatory review.
According to Bloomberg, the Bank of New York Mellon could resume offering custody services for the Bitcoin and Ethereum spot exchange-traded funds (ETFs) after the bank received an exemption from the Office of the Chief Accountant at the US Securities and Exchange Commission.
BNY Mellon Gets Regulatory Nod
The world’s largest custodian bank filed a redress on the Staff Accounting Bulletin 121 guideline, prompting it to declare crypto assets in custody as liabilities in its balance sheet. Introduced in March 2022, the law limits banks’ exposure to the emerging digital asset innovation.
Following the regulatory review, BNY Mellon received an injunction allowing it to pursue its goals of custodying Bitcoin and Ethereum spot ETFs without disclosing them in its balance sheet. However, the banking giant confirmed the exception was only binding on the ETF products and not digital assets in general.
However, BNY Mellon stated its legal team will further engage with the Office of the Chief Accountant to enhance the utility of the no-objection clearance. It bears mention that BNY Mellon already offers 80% of the SEC-approved Bitcoin and Ethereum ETFs.
Meanwhile, attempts to fully repeal the SAB 121 rules have yet to come to fruition. Earlier in the year, the House and Senate voted against the law, which impedes crypto adoption by banks, but President Joe Biden vetoed the overturn.
BNY Mellon Crypto Push
The oldest American bank declared its intention to dive into crypto custody as early as 2022 after stating in its financial report that it aims to expand to digital assets in the future. It noted that there is a strong demand for competent custody providers for digital assets.
Per Bloomberg, the crypto custody market is currently worth $300 million and is expected to grow by 30% yearly. At that pace, the sector would be worth over $1 billion in the next eight years.
Notably, BNY Mellon’s involvement in crypto ETF custody will bring competition to the sector, largely dominated by Coinbase. The US-based crypto exchange provides custody to ten of the eleven Bitcoin spot ETFs and eight of nine of the Ethereum spot ETFs, including the leading issuer, BlackRock.
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