The world’s largest asset custodian bank, BNY Mellon, has revealed its plans to launch crypto exchange-traded fund (ETF) custody services for its clients.
This move comes after the US Securities and Exchange Commission (SEC) gave the bank a pass on observing controversial cryptocurrency accounting guidelines.
At the moment, BNY Mellon would offer its custody services only for Bitcoin and Ethereum ETFs
BNY Mellon To Roll Out Crypto ETF Custody Services For Clients
Bank of New York Mellon Corp. is about to roll out crypto ETF custody services for its clients, according to a report from Bloomberg. The bank states that the custodial services will be for its ETF clients’ Bitcoin and Ethereum.
Earlier this year, the Office of the Chief Accountant at the US SEC reviewed BNY Mellon and concluded that the bank does not need to obey the SEC’s Staff Accounting Bulletin (SAB) 121, the report stated. This means that the bank has received an exemption from observing the controversial cryptocurrency accounting guidelines.
This exemption aided the bank’s move to launch its crypto ETF custody services for clients.
BNY Mellon’s Crypto ETF Custody Services, A Threat To Coinbase’s Dominance
BNY Mellon’s entry into the BTC and ETH ETF custody market could be a potential threat to Coinbase’s dominance, considering that BNY is the largest asset custodian bank in the world. This is because Coinbase crypto exchange currently offers custody services to most US spot bitcoin ETFs, including BlackRock’s IBIT.
According to the report, the cryptocurrency custody market is currently worth about $300M, with an annual growth of about 30%. That means custody services providers can charge higher fees for cryptocurrencies than they charge for traditional assets, given cryptocurrency’s security-related risks.
Financial Giants Are Embracing The Burgeoning Cryptocurrency Market
Since January 2023, the Bank of New York has publicly expressed its interest in getting into crypto assets. At that time, the bank’s CEO, Robin Vince, stated that crypto assets are BNY Mellon’s “longest-term play.”
The report further revealed that BNY supports 80% of SEC-approved BTC and ETH exchange-traded products via its fund services business.
Also, in a recent SEC filing, the bank revealed its holdings in BlackRock’s IBIT and Grayscale’s GBTC. This revelation aligns the bank with other top financial giants that are embracing the ever-growing crypto market.
Financial giants like Morgan Stanley, Wells Fargo, and UBS are reportedly considering the crypto space through the spot Bitcoin ETFs, offering these investment tools to their clients.
Performance and Impact of Leading Spot Bitcoin ETFs
The US SEC approved 11 spot Bitcoin ETFs earlier this year, which marked a significant regulatory milestone. The approval propelled the price of Bitcoin to a new all-time high (ATH) of $73,735 in March before other factors caused the price to plunge.
BlackRock’s IBIT is leading the charge in the US spot Bitcoin ETFs market currently, surging to over $224M in inflows on August 26.
