US banking giant BNY Mellon is making strides towards offering custody services for Bitcoin and Ether, specifically for its exchange-traded product (ETP) clients. This development follows a Securities and Exchange Commission (SEC) review, which has important implications for how banks handle digital assets, Bloomberg reported on Tuesday.
Earlier this year, the SEC’s Office of the Chief Accountant reportedly reviewed BNY Mellon’s approach to crypto custody. The outcome? The SEC didn’t object to BNY Mellon’s decision not to include these crypto assets as liabilities on its balance sheet.
This review was crucial because of the SEC’s SAB 121 rule, which requires banks to account for crypto assets they safeguard as both a liability and an asset on their balance sheets. BNY Mellon’s unique case with ETPs, however, seems to bypass this requirement, at least for now.
The bank didn’t return Cryptonews’ request for comment by press time.
What is SAB 121?
SAB 121 is a rule that the SEC set to enhance transparency in the financial statements of entities that safeguard crypto assets for others. It mandates these entities to recognize the crypto they hold as liabilities, aiming to clarify the risks involved in managing these assets.
The SEC’s decision applies specifically to BNY Mellon’s operations with ETPs, which means this solution might not extend universally across all crypto custody scenarios, the Bloomberg report indicated.
BNY Mellon Expands Crypto Custody Amid Dialogue with SEC and Banking Regulators
The bank is keen on engaging further with the SEC and other banking regulators to expand its crypto custody services. The bank aims to offer these services on a larger scale, indicating a cautious yet optimistic approach towards integrating crypto within traditional financial services.
For banks like BNY Mellon, navigating regulatory landscapes to offer crypto-related services involves ongoing dialogue with multiple regulatory bodies. This latest approval is a key step, but broader regulatory acceptance is still necessary for comprehensive crypto custody services.
BNY Mellon’s move towards Bitcoin and Ether custody, albeit initially limited to ETP clients, marks a significant step. It highlights the evolving relationship between traditional finance and cryptocurrencies, driven by regulatory clarity but also shadowed by ongoing complexities in accounting and oversight.
As banks continue to test these waters, the financial landscape might soon see more integration of digital assets, contingent on regulatory adjustments and bank-specific engagements like that of BNY Mellon.
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