In a significant development for the cryptocurrency industry, BNY Mellon has received approval from the Securities and Exchange Commission (SEC) to hold crypto assets beyond Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs). This approval is a result of a non-objection letter that expands the bank’s custody capabilities.

SEC Review and Approval

According to Gary Gensler, the SEC reviewed BNY Mellon’s custody framework and found no issues, allowing the bank to expand its crypto asset services. The bank has secured a special designation called a non-objection letter, which is an exception to the controversial SAB 121 rule. This rule makes it more difficult for traditional banks to offer crypto custody services.

Implications for the Industry

The approval of BNY Mellon’s crypto custody services has significant implications for the industry. It means that banks like BNY Mellon can now offer more competitive rates compared to non-bank companies like Coinbase Custody. The crypto custody market is worth around $300 million and is growing by 30% annually.

Gensler’s Comments

Gary Gensler, the SEC Chairman, commented on the approval, stating that the structure of the custody framework is not dependent on the specific crypto asset. This means that the approval is not limited to BTC and ETH, but can be applied to a broader range of crypto assets.

SAB 121 Rule

The SAB 121 rule requires firms to recognize liabilities for obligations to safeguard crypto assets they hold for others, record these assets at their current market value, and disclose the associated risks. This results in increased liabilities on balance sheets, higher costs due to more complex accounting practices, and increased operational burdens from additional accounting requirements.

Potential Market Growth for Traditional Banks

The approval of BNY Mellon’s crypto custody services may pave the way for other traditional banks to follow suit. This could lead to increased competition in the crypto custody market, which could drive down costs and improve services for investors.

Key Takeaways:

• BNY Mellon has received approval from the SEC to hold crypto assets beyond BTC and ETH ETFs.
• The approval is a result of a non-objection letter that expands the bank’s custody capabilities.
• The SEC reviewed BNY Mellon’s custody framework and found no issues.
• The approval may pave the way for other traditional banks to offer crypto custody services.
• The crypto custody market is worth around $300 million and is growing by 30% annually.

Conclusion:

The approval of BNY Mellon’s crypto custody services is a significant development for the cryptocurrency industry. It may pave the way for other traditional banks to offer crypto custody services, which could lead to increased competition and improved services for investors. The SEC’s approval of BNY Mellon’s custody framework is a positive sign for the industry, and it may indicate a more favorable approach to crypto regulation in the future.