BNY Mellon, the oldest continually operating bank in the United States, will now offer crypto custody services to its customers. The decision makes it one of the first large banks in the US to take the plunge into crypto custody.
Details of the BNY Mellon Crypto Custody Service
BNY Mellon received the approval of New York’s financial regulator earlier this fall. Under the approval, BNY Mellon can receive Bitcoin and Ether from select customers starting this week. BNY Mellon will store the private keys for the crypto assets. It will also provide bookkeeping services on those cryptocurrency assets, similar to what it offers fund managers for their portfolios of bonds, stocks, commodities, and other mainstream assets.
The approval marks a major milestone for traditional banks in the US. It signals a growing acceptance of crypto assets as a legitimate asset class and a source for new business.
Money managers have relied on BNY Mellon and other custody banks for an array of vital bank office functions like tracking changes to the value of their assets. The bank, founded by Alexander Hamilton nearly 200 years ago, is one of the biggest custody banks in the world.
A New Era for Crypto Custody
Fund managers had to rely on crypto specialists to manage crypto custody until now. BNY Mellon revealed it was the first of eight systemically important US banks to store crypto and allow customers to use a single custody platform for traditional and crypto holdings.Â
BNY Mellon will provide its crypto custody solution using software created by Fireblocks. Additionally, it will rely on the software created by Chainalysis to analyze and track the path assets take before coming into the bank’s custody.
Why the New Service Matters
BNY Mellon is one of the largest banks in the world by assets it manages. It currently manages assets worth over 2 trillion. A long-established bank established in 1784 by Alexander Hamilton. It has earned the confidence of investors during its long history.
Its decision to offer crypto custody services will boost institutional confidence in crypto assets. Since the space boomed in 2021, various Wall Street investors have shown interest in the sector. However, it still has a long way to go.
For instance, while traditional asset classes enjoy superb legal protection, crypto remains a grey area. BNY Mellon’s decision to offer crypto custody will ensure investors enjoy the same level of protection as other asset classes. The lack of proper custody solutions may have kept some institutional investors off crypto. However, they might now be willing to gain direct exposure to the sector.
While it is unlikely to spark off a flurry of crypto investments, BNY Mellon’s new solution will play a huge role in the long-term resilience of the industry.
