BNY Mellon will hold Bitcoin and Ethereum for clients. Here’s why it matters

BNY Mellon has taken several steps to embrace digital assets this year.

BNY Mellon offers crypto custody

America’s oldest bank has just been given the green light to start accepting crypto on behalf of customers, The Wall Street Journal have reported.

According to a Tuesday report, BNY Mellon will begin accepting certain customers’ Bitcoin and Ethereum starting today after receiving approval from the New York State Department of Financial Services.

BNY Mellon will provide custody services for clients holding the top two crypto assets, storing the private keys used to unlock their crypto wallets. The bank will use Fireblocks-developed software to store the assets and follow the paper trail of any crypto funds coming to the bank via Chainalysis, the report said.

The move marks another big step into the cryptosphere from BNY Mellon. The institutional giant has been keeping a close eye on the digital asset space since the 2021 bull run, first announcing its plans to offer Bitcoin custody services in 2021. It has since backed Fireblocks and crypto trading platform Pure Digital, signaling its belief in the growth of the sector for miscellaneous. It also teamed up with one of crypto’s largest investment firms, Grayscale, in July 2021 to help the fund manager convert its flagship Bitcoin Trust product into an exchange-traded fund (Grayscale has yet to receive approval from the Securities and Exchange Commission).

BNY Mellon’s conviction in crypto should instill confidence in the asset class among other big names on Wall Street. BNY Mellon was founded by Alexander Hamilton in 1784, and is America’s oldest bank. It oversees more than $2 trillion in assets under management, most of which come from wealthy fund managers.

Wall Street rates through crypto winter

Other Wall Street institutions have signaled their interest in crypto since the space boomed in 2021, although a months-long $2 trillion decline since the market peaked last November has done little to quell mainstream skepticism about the notoriously volatile asset class . Investment management titan Ruffer was another major institutional name that sparked huge excitement in the crypto space when it invested in Bitcoin last year; the firm later revealed that it had sold its holdings at a profit of $1 billion to “avoid the mania.”

Outside of Wall Street, Elon Musk’s Tesla also made headlines around the world when it dipped its toes into the top crypto with a $1.5 billion bet, although the electric car firm suffered a losing trade, dumping most of its holdings with losses in the second quarter. this year.

Still, while the ongoing bear market has washed out many former giants — one-time crypto favorites Terra, Celsius and Three Arrows Capital among them — and caused some in traditional finance to question the future of technology, there are clear signs that some of the world’s richest are still interested in the nascent space.

Goldman Sachs began offering over-the-counter crypto trading for clients as the market tumbled earlier this year, and in September Nasdaq launched its own custody service for institutions. Some celebrated names on Wall Street have also indicated that they believe crypto has a bright future even with a US recession on the cards. Stanley Druckenmiller said last month that the space could see a “renaissance” if the public loses faith in central banks, while Paul Tudor Jones has called for the asset class to rise in value as the Fed reverses its monetary tightening policy. Speaking to CNBC on Monday, the billionaire investor pointed to Bitcoin and Ethereum’s scarcity as the root cause of his bullish outlook.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.