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BNY Mellon, a leading global financial services giant, has just received regulatory approval to provide crypto custody services for exchange-traded products (ETPs) centered on Bitcoin and Ether. This move could shake up the cryptocurrency scene and pose a serious challenge to Coinbase’s stronghold in the U.S. spot Bitcoin ETF market.
According to a Bloomberg report on Tuesday, the bank has received a positive review from the Securities and Exchange Commission (SEC), paving the way for its entry into this lucrative market.
The bank's approval from the SEC comes after a rigorous review by the Office of the Chief Accountant. The regulator's decision to allow BNY Mellon to bypass balance-sheet liabilities for safeguarding crypto assets is a significant win for the bank, removing a major hurdle in offering these services.
Additionally, the SEC granted BNY Mellon an exemption from SAB 121, a rule that typically requires banks to recognize crypto-related assets on their balance sheets. This exemption further solidifies BNY Mellon's position as a frontrunner in the crypto custody space.
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BNY Mellon's entry into the market could disrupt Coinbase's current dominance. Coinbase has been the go-to custodian for many US spot Bitcoin ETFs, including BlackRock's. However, BNY Mellon's deep experience in the financial services industry, coupled with its newly acquired regulatory approvals, positions it as a formidable competitor.
Beyond the SEC, BNY Mellon must also navigate the regulatory landscape at the state and federal levels. The bank has engaged and will continue to engage with its banking regulators to obtain the necessary approvals to offer custody services to crypto ETP clients at scale.
