BNY Mellon Moves To Let Institutions Hold Bitcoin, Ether

Certain institutional clients of America’s oldest bank, BNY Mellon, can hold and transfer bitcoin and ether on its new crypto custody platform now live in the US.

The bank in February 2021 formed a digital assets unit tasked with developing a client-facing prototype of a multi-asset custody and administration platform for traditional and digital assets. 

BNY Mellon teamed up with Fireblocks and Chainalysis to help meet technology, security and compliance needs for institutions, the company said Tuesday.

The platform is set to onboard select investment fund firms this week, the Wall Street Journal reported, while the bank expects to expand the offering to other clients going forward. 

“Touching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets,” BNY Mellon CEO Robin Vince said in a statement. “We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey.” 

A BNY Mellon spokesperson did not immediately return a request for comment.

BNY Mellon had $43 trillion in assets under custody or administration as of June 30 and $1.9 trillion in assets under management. 

“As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients,” Caroline Butler, CEO of the firm’s custody services, said in a statement. 

“We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs,” she added.

BNY Mellon opens to bitcoin as TradFi pushes tokenization

The launch follows a recent BNY Mellon survey which found that 41% of institutional investors hold crypto in their portfolios today while 15% plan to hold digital assets within the next two to five years. 

Of those surveyed, 91% said they are interested in investing in tokenized assets. Separate from bitcoin and ether, these are real-world assets or shares of a fund that can be traded on a digital ledger.

Tokenization is a key focus for the digital arm of fellow banking giant State Street. WisdomTree CEO Jonathan Steinberg has said repeatedly in recent months that he expects virtually all financial assets will eventually come to the blockchain through tokenization. 

Private markets investment firm Hamilton Lane then revealed last week that it would make three of its funds available via tokenized feeder funds.

Investment firms, such as Franklin Templeton, Ark Invest and Valkyrie Investments, have also launched crypto-focused separately managed accounts (SMAs) in recent weeks, citing demand for crypto among wealth manager clients.

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