BNY Mellon officially launches its crypto custody service
BNY Mellon, which oversees about $47 trillion in assets, has set up a new unit dedicated to providing its clients with ‘an integrated service’ for digital assets, which would cover classic cryptocurrencies and could be extended to stablecoins.
Upon launch, BNY customers will be able to store Bitcoin and Ether in its crypto wallets which are powered by Fireblocks technology.
Citing growing client demand, maturity of blockchain and better regulatory clarity, America’s oldest bank said “the idea is that we build a digital asset platform the cornerstone of which is custody that will enable the interoperability of traditional assets and digital.”
Further, the custodian bank, which is sitting on $2 trillion in assets under management, states that even conservative clients are seeking exposure to digital assets. The new offering also targets native crypto firms, like Coinbase and other US exchanges, who are looking for BNY Mellon’s core investment services.
“Touching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets. We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey,” said Robin Vince, Chief Executive Officer and President at BNY Mellon.
“As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients. We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs,” added Caroline Butler, CEO of Custody Services at BNY Mellon.
BNY Mellon has been developing a prototype that eventually allows cryptocurrencies to pass through the same financial network it currently uses for investments in traditional assets like bonds and stocks. The custody bank describes this system as “the first multi-asset digital custody and administration platform for both traditional and digital assets—bringing bitcoin and cryptocurrencies under the same roof as traditional holdings.”
BNY Mellon ventured into the crypto space earlier in 2019 when it partnered with Bakkt, which created the first federally regulated cryptocurrency marketplace, to offer geographically-distributed storage of private keys secured by the bank.
In essence, BNY Mellon’s traditional role as a custodian of assets enables Bakkt to meet federal regulations that require brokers, exchanges and others to store investors’ assets with institutions like Bank of New York.
Consequently, BNY and Bakkt have set up a crypto-custody service, under which the Wall Street bank’s history of safeguarding the assets of institutional clients is leveraged to store Bakkt’s digital assets.
Interestingly though, BNY Mellon was accused of playing a central role in the OneCoin cryptocurrency scam. FinCEN files showed the bank processed funds worth a total of $137 million for companies and people associated with the $4 billion Ponzi scheme.