1. BNY Mellon Bitcoin ETF Custody Service Gets SEC Exemption
2. BNY Mellon's Advancement in Digital Assets
3. Regulatory Challenges Facing BNY Mellon

Bank of New York Mellon is a step closer to offering custody for Bitcoin and Ethereum held by its exchange-traded product clients.

BNY Mellon Bitcoin ETF Custody Service Gets SEC Exemption

Following review, the U.S. Securities and Exchange Commission (SEC) found the BNY Mellon Bitcoin ETF service exempt. The bank would not need to count customer crypto holdings as corporate liabilities—a significant development for traditional financial institutions. According to a report from Bloomberg, this exemption was granted under the SEC's Staff Accounting Bulletin 121. After investigation, the SEC's Office of the Chief Accountant exempted the bank, allowing it to hold crypto assets without recognizing them as liabilities on its balance sheet.

BNY Mellon's Advancement in Digital Assets

A hypothetical BNY Mellon Bitcoin ETF custody service could, in theory, open the door to other large banks that have been extremely cautious in joining the crypto custody market, which is currently dominated by native cryptocurrency players like Coinbase. BNY Mellon has positioned itself in the crypto custody space, particularly in a constantly expanding market. Analysts estimate this crypto custody market at roughly $300 million today, with an annual growth rate of 30%. By 2032, the sector could top $1 billion in value, offering an opportunistic opening for institutions like BNY Mellon to take a leading role.

Regulatory Challenges Facing BNY Mellon

Despite this progress, a few regulatory challenges persist. Lawmakers take exception to the opinion that SEC staff meetings with private companies lack transparency. BNY Mellon's foray into the crypto space began at the beginning of 2023 when CEO Robin Vince made digital assets a core component of the bank's future strategy. Although the company had prepared the needed technical infrastructure to custody digital assets since 2022, the SAB 121 rule delayed the launch of its services. The bank has stated it will continue working with regulators to extend its crypto custody services.

In summary, Bank of New York Mellon has made significant progress toward offering crypto custody services, despite existing regulatory challenges. As they advance in this direction, BNY Mellon stands to become a key player in the emerging digital asset custody market.