According to a report by Bloomberg News on September 24, after obtaining an exemption from the SEC (U.S. Securities and Exchange Commission), Bank of New York Mellon (BNY Mellon) entered the Crypto asset custody market, especially the BTC and Ethereum ETF custody markets. an important step.
According to reports, Bank of New York Mellon received an exemption from SEC Staff Accounting Bulletin No. 121 (SAB 121) during a review by the Office of the Chief Accountant.
This exemption allows banks to classify Crypto assets held by customers differently, meaning they do not need to treat these assets as corporate liabilities.
This operational shift could give more traditional banks the ability to offer custody of crypto assets, a service that until now has been largely unavailable to them.
The development also positions BNY Mellon to challenge Coinbase’s current dominance in crypto asset management and build on the company’s crypto asset custody ambitions.
The move to provide custody services for spot BTC and Ethereum ETFs could significantly disrupt the current market landscape, as Coinbase oversees the majority of Wall Street’s Crypto ETFs, including those from major asset managers such as BlackRock, which manages with approximately US$10 trillion in assets.
Currently, Coinbase is positioned as the leader in digital asset custody for these funds, but the addition of BNY Mellon could increase competition and provide customers with more options.
Since early 2023, BNY Mellon has expressed strong interest in the Crypto asset custody space
In January of the same year, CEO Robin Vince emphasized during an earnings call that digital assets were part of the company's long-term strategic vision, and pointed out that institutional clients have a growing demand for digital asset services.
Analysts estimate that the crypto asset custody market is growing at about 30% annually and is currently valued at $300 million.
If this growth trajectory continues, the market will exceed $1 billion by 2032, growing by approximately $90 million annually.
Despite the promising outlook, regulatory challenges remain a major concern for BNY Mellon as it seeks to gain a foothold in the crypto asset custody space.
Lawmakers including Rep. Patrick McHenry and Sen. Cynthia Lummis have expressed concerns about the transparency of interactions between SEC staff and private companies.
In a bicameral letter to the SEC and other regulators, they cited private meetings where SAB121 exemptions were allegedly discussed.
It is unclear whether BNY Mellon’s exemption is part of these discussions, raising questions about the regulatory landscape for the bank’s activities in crypto asset markets.
BNY Mellon's success will depend in large part on its ability to navigate a complex regulatory environment while capitalizing on growing institutional investor demand for digital asset services.
