NEW YORK–The nation’s oldest bank announced it will enter the market for one of the world’s newest “currencies.” Bank of New York Mellon announced it will hold, transfer and issue bitcoin and other cryptocurrencies on behalf of its asset-management clients.
In the role as a custodian, BNY Mellon keeps track of money managers’ assets in which it stores some of the assets itself while attesting to the existence of others, the Wall Street Journal reported. Until now, those money managers have had to use separate custodians for their cryptocurrency holdings.
BNY Mellon said it would allow digital assets to pass through the same plumbing used by managers’ other, more traditional holdings—from Treasuries to technology stocks—using a platform that is now in prototype. The bank is already discussing plans with clients to bring their digital currencies into the fold, the Journal reported.
“Digital assets are becoming part of the mainstream,” Roman Regelman, chief executive of BNY Mellon’s asset-servicing and digital businesses, told the Journal.
“It is a big step for Wall Street’s back-office banks, whose concerns over regulatory, legal and stability risks left them reluctant to come into direct contact with crypto markets,” the Journal noted in its analysis. “BNY Mellon and its rivals were working on various services for clients’ digital assets for years, but have been waiting for signs from regulators that they could move forward in a market at one time criticized for its use in illicit activity. One signal flashed earlier this year, when the Office of the Comptroller of the Currency weighed in on banks’ use of blockchain technologies.”
Values Surge
The Journal noted Bitcoin and other digital assets have have continued to rise, they have become more popular with asset managers, hedge funds and other institutional investors. Bitcoin hit an intraday high of $48,635.84 last week, according to CoinDesk.
“As clients evolve, you need to evolve with them,” Glenn Schorr, an analyst with Evercore ISI, told the Journal. “Who are you to say, `No one will use crypto’?”