America’s oldest bank to launch institutional crypto custody service

The Bank of New York Mellon Corporation, better known as BNY Mellon, is reportedly gearing up to become “the first [bank] to enter the global digital custody space” later this year.

According to a report published by City A.M. on February 24, BNY Mellon’s upcoming custody platform will be aimed at institutional clients, enabling big players to hold their Bitcoin and Ethereum in the bank’s crypto wallets.

Meeting institutional demand

Katey Neate, the chief risk officer for asset servicing and digital at BNY Mellon, told the outlet:

“We announced last year that we were standing up for digital asset users. The idea is that we build a digital asset platform the cornerstone of which is custody that will enable the interoperability of traditional assets and digital.”

The 238-year-old bank reportedly plans to launch its new custody platform only in the U.S. initially, but may expand to additional territories in case there’s demand for it.

“I think what we’re seeing in the UK is that there’s a really vibrant and active digital assets market here,”

Explained Talia Klein, the head of digital asset custody commercial products at BNY Mellon.

Further, although Bitcoin and Ethereum will be the first two cryptocurrencies supported by the new platform at launch, other tokenized traditional and digital assets will likely be added to in the future.

“I think regulatory clarity is improving, and people are feeling more confident because of that regulatory clarity,” Neate added. “It’s still not the Nirvana that we’re looking for, but it’s at least easier to read the tea leaves now and understand what to look for when you’re developing a risk framework.”

Investments bearing fruit

Notably, BNY Mellon’s crypto custody service will be based on a framework developed by Fireblocks, a blockchain startup platform that specializes in digital asset custody. As CryptoSlate reported, the bank was among several other investors that helped Fireblocks raise $133 million in its Series C funding round last March.

Coatue Management, Ribbit Capital, Stripes, and Silicon Valley Bank also were among the investors.

Last April, BNY Mellon also reportedly cited “no exposure to Bitcoin” as one of the main reasons why its technology-focused fund underperformed.

We’re thrilled to be the first Global Systemically Important Bank with plans to utilize @chainalysis’s risk management software as a component of our strategy to develop cryptocurrency services for our clients. https://t.co/BZC88wc7ic pic.twitter.com/BhdJ9WJZ9p

— BNY Mellon (@BNYMellon) February 23, 2022

Yesterday, the bank also announced that it will team up with crypto intelligence firm Chainalysis to utilize its “risk management software as a component of our strategy to develop cryptocurrency services for our clients.”