BNY Mellon Receives SEC Approval for Crypto Custody: A Game Changer for Bitcoin Adoption?

BNY Mellon’s Move into Crypto Custody

BNY Mellon, America’s largest custodian bank, has reportedly received SEC approval to offer institutional crypto custody services, marking a significant moment for institutional acceptance of Bitcoin. This approval comes after testimony at a Wyoming public hearing, where Chris Land, general counsel for US Senator Cynthia Lummis, indicated that BNY Mellon had received a variance from the SEC’s Staff Accounting Bulletin (SAB) 121.

Key Takeaways

• BNY Mellon received a variance from SEC's SAB 121 for crypto custody.
• This move signals a major institutional shift in the crypto space.

The SEC’s SAB 121 has long been viewed as a barrier for banks entering the crypto custody market, as it requires entities to list crypto assets on their balance sheet and create corresponding liabilities. However, with this new variance, BNY Mellon and potentially other banks may now begin to offer these services to institutional clients.

“[BNY] is looking to get more involved in the crypto custody business,” stated Chris Land. “They had some problems with SAB 121, and the SEC has apparently given them some kind of variance from SAB 121 to move forward.”

This approval could pave the way for BNY Mellon to argue for an exemption from New York’s BitLicense, which regulates crypto businesses in the state. The bank might contend that federal banking laws supersede state laws like the BitLicense.

BNY Mellon’s entry into the crypto custody arena could be a pivotal moment for institutional crypto adoption, reinforcing Bitcoin’s status as “real money” in global finance. Prominent figures like Michael Saylor have endorsed this development, suggesting that it could lead to more major US banks offering custody for Bitcoin.

However, this move raises concerns within the Bitcoin community, as the cryptocurrency was originally designed to operate outside traditional financial systems. Many Bitcoin purists worry that involving major financial institutions like BNY Mellon could undermine Bitcoin’s core ethos of decentralization, integrating it into the very system it sought to challenge.