America's oldest bank, BNY Mellon, is nearing the provision of custodial services for ETF clients. This move follows a recent review by the Securities and Exchange Commission (SEC). The bank's foray into this market indicates its growing interest in digital assets and could change the landscape for crypto ETF custody.
SEC Review Clears Path
Earlier this year, the SEC’s Office of the Chief Accountant conducted a review allowing BNY Mellon to avoid treating the custody of crypto assets for its regulated ETF clients as a balance-sheet liability. This decision granted BNY Mellon an exemption from the SEC’s Staff Accounting Bulletin No. 121 (SAB 121), paving the way for the bank to provide custody services for crypto ETFs.
Impact on Crypto Custody Market
BNY Mellon’s entry into the crypto custody market challenges existing players. Bloomberg estimates the current market value at around $300 million, growing 30% annually.
Competition with Existing Players
Currently, Coinbase dominates this space, offering custodial services to most U.S. spot Bitcoin ETFs, including the largest one issued by BlackRock. BNY Mellon’s involvement could disrupt Coinbase's market dominance.
BNY Mellon’s decision to enter the ETF custodial services market is a significant move that could impact the market share of existing players and accelerate growth in the crypto asset sector.
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