ABMedia pointed out in an earlier report that according to information revealed at a public hearing held in Wyoming on September 16, Bank of New York Mellon Corp. (BNY) received a special exemption from the SEC. There is no need to comply with SAB 121 accounting guidance for institutional crypto custody businesses. Now Bloomberg has confirmed the news and said that the company is further launching custody services for Bitcoin and Ethereum held by exchange-traded products (ETFs). .
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ToggleSystemically Important Banks About to Enter Crypto Custody
The Bank of New York Mellon (BNY) is the largest custodian bank in the United States and one of the 29 Global Systemically Important Banks (G-SIB) in the world. G-SIB is established by the Financial Stability Board (FSB) and Basel The list, confirmed in November each year after review and consultation between the Board of Banking Supervisors (BCBS) and national authorities, requires these "too big to fail" banks to have higher loss-absorbing capabilities.
The latest list includes 29 well-known global banks including JPMorgan Chase, Bank of America, Citibank, HSBC and Bank of New York Mellon.
What does the SAB 121 exemption mean?
The SAB 121 accounting guidance rule requires entities that choose to custody cryptocurrencies to include the crypto-assets under their custody on their balance sheet and establish corresponding liabilities. The rule sets out points that require special consideration in financial reporting in response to the unique risks involved with crypto-assets, such as technical, legal and regulatory uncertainties.
Under SAB 121, entities with custodial responsibilities for crypto-assets must recognize the custodial responsibility and corresponding assets on their balance sheets and measure them at fair value . The concept is that custodians must set aside corresponding reserves for this, which is undoubtedly a big challenge for banks that are strictly regulated, because the conditions required of them may be higher. This is why major banks were previously reluctant to get involved in encryption easily. One of the reasons for hosting. This SEC exemption has significant implications for other banks looking to enter the crypto custody space.
Mellon Bank has managed 80% of Bitcoin and Ethereum ETFs
Bank of New York Mellon has publicly expressed interest in getting involved in digital assets since January 2023, when CEO Robin Vince said on an earnings call that digital assets were the bank's "longest-term investment." According to Bloomberg, the bank supports 80% of SEC-approved Bitcoin and Ethereum ETFs through its fund services business, but this refers to the “cash and securities custody” part.
However, by participating in the operation of crypto-asset ETFs, Mellon Bank also has a deeper understanding of how crypto-assets operate, which is indeed a springboard for it to enter crypto-asset custody.
The biggest impact on Coinbase
For the Bitcoin and Ethereum spot ETFs currently issued in the United States, except for the VanEck Ethereum ETF (ETHV), which is hosted by Gemini, and the Fidelity Ethereum Fund (FETH), which is hosted by its own Fidelity, the other ETF custody is exclusively handled by Coinbase, including assets Two ETFs issued by giant BlackRock.
Recently, it has been reported that BlackRock has begun operating Bitcoin nodes and strengthening Bitcoin spot ETF protection measures. It also shows that traditional finance is still somewhat uncertain about the encryption field. It hopes that more protection measures will increase investor confidence. . The entry of Mellon Bank is believed to enhance the confidence of traditional investors and expand the application areas of crypto assets.
