BNY Plans to Dive Into Crypto ETF Custody Business
Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.
US bank BNY 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.
BNY told Cryptonews that it received confirmation from the SEC’s Office of the Chief Accountant that they have no objection to the bank’s approach of not treating digital assets, held for SEC-registered crypto-asset ETPs, as liabilities on its balance sheet.
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.
The bank is keen on
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