BNY Mellon to Offer Bitcoin and Ether Custody to ETP Clients

BNY Mellon, one of the largest custodian banks globally, is preparing to provide custody services for bitcoin and ether to clients holding exchange-traded products (ETPs). The bank sees this as a step toward expanding its presence in the cryptocurrency market. To support this, BNY Mellon plans to seek further regulatory approvals, positioning itself to serve the growing demand for secure digital asset storage.

The move comes after BNY Mellon’s review of crypto regulations. The Securities and Exchange Commission’s (SEC) Office of the Chief Accountant recently completed its review without objections, allowing the bank to move forward. BNY Mellon confirmed that the crypto assets held for its ETP clients won’t be recognized as balance-sheet liabilities, an essential distinction for the bank. This decision relates specifically to its ETP custody clients, despite the SEC’s Staff Accounting Bulletin 121 (SAB 121), which typically requires banks to account for crypto assets on their balance sheets.

By addressing these regulatory issues, BNY Mellon is clearing the way for expanding its crypto offerings. The bank has stated, “BNY has engaged, and will continue to engage, its banking regulators to offer custody services to crypto ETP clients at scale.”

BNY Mellon has been part of the financial world for over two centuries, overseeing about $50 trillion in assets as of mid-2024. Its size and experience make it a key player in both traditional finance and digital asset custody.

The potential profits from crypto custody are drawing increasing interest from financial institutions. Holding digital assets like bitcoin and ether allows banks to charge significantly higher fees than traditional asset custody. This has made the crypto custody business an appealing opportunity for large institutions like BNY Mellon, which already plays a significant role in managing SEC-approved bitcoin and ether ETPs.

According to a recent BNY Mellon survey, more than 30% of family offices in the United States are actively investing in cryptocurrencies, and many are thinking about growing their holdings.