BNY Mellon’s crypto custody venture runs afoul of SEC rules

CryptoSlate
CryptoSlate

30 Jun 2023 4:15 PM

BNY Mellon's attempts to custody crypto assets have hit regulatory speed bumps over definitions and technicalities....

  • The Bank of New York Mellon (BNY Mellon) has encountered a regulatory hurdle in its digital asset custody business.
  • The Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121 (SAB 121) requires custodians of digital assets to record them on their balance sheets.
  • This poses a potential challenge for banks, especially those specializing in trust services like BNY Mellon, looking to scale their digital asset custody business.
  • BNY Mellon had already made progress in establishing its crypto custody business before discovering the regulatory roadblock.
  • The bank had initially treated digital assets similarly to traditional ones, which are not recorded on its balance sheet.
  • The SEC's position on this matter could discourage other banks, such as JPMorgan and Goldman Sachs, from expanding into crypto custody.
  • Banks may need to hold capital against digital assets, affecting their decisions on providing crypto custody services.
  • The debate centers around whether crypto assets are fundamentally similar to traditional assets, considering the higher technological and operational risks associated with cryptocurrencies.

The sentiment of the article is neutral, presenting the regulatory hurdle faced by BNY Mellon and the potential impact on other banks looking to enter the crypto custody business.

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You May Ask

What regulatory hurdle has BNY Mellon encountered in its digital asset custody business?What requirement does the SEC's Staff Accounting Bulletin 121 impose on custodians of digital assets?How could the SEC's position on recording digital assets on balance sheets affect banks' expansion into crypto custody?What risks are associated with crypto assets compared to traditional assets, according to John Sedunov?

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