SEC Approves BNY for Crypto Custody Beyond ETFs

Bank of New York Mellon Corp(BNY Mellon), America’s largest custodian bank, has reportedly been approved by US SEC for crypto custody beyond Exchange Traded Fund(ETFs). BNY is eligible to offer Bitcoin custody services and crypto digital assets. 

This decision establishes BNY Mellon as the first institution in the US to get an exemption from the Biden-vetoed SAB 121 accounting rule change.

Speaking on BNY Mellon’s crypto custody framework, SEC Chair Gary Gensler said that the structure used for Bitcoin and Ether ETFs could be extended to other digital assets.

However, Gensler also added, “Though the actual consultation related to two crypto assets, the structure itself was not dependent on what the crypto was, it didn’t matter what the crypto was.”  

Gensler said that the “non-objection” of the extension to custody services is based on the structure itself, not the type of ‘crypto asset’, and could be set as an example for other banks to adopt the same model for crypto custody.

The approval depends upon BNY’s use of individual crypto wallets, ensuring that customer assets are protected and separated from the bank’s own assets if hit by insolvency. BNY’s wallet structure was developed with the SEC’s Office of Chief Accountant’s consultation, further leading to the SEC’s “non-objection” decision. 

The crypto custody market is mostly thronged with non-bank custody providers charging high fees. Amidst this, financial institutions banks like BNY Mellon can offer more secure and regulated solutions.

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