BNY Mellon to Add Cryptocurrency Custody Services

BNY Mellon, the country's oldest bank, is moving into the cryptocurrency market, creating a new unit to provide custody and administrative services for investment clients.

It is the first global bank to do so. The Digital Assets unit, led by Mike Demissie, head of Advanced Solutions, is currently developing a multi-asset digital custody and administration platform that will accommodate both digital and traditional assets.

"Growing client demand for digital assets, maturity of advanced solutions, and improving regulatory clarity present a tremendous opportunity for us to extend our current service offerings to this emerging field," said Roman Regelman, CEO of asset servicing and head of digital at BNY Mellon, in a statement. The bank expects to begin offering digital custody services later this year, pending "further evaluations and approvals," according to Regelman.

The OCC Letter

The BNY announcement comes after the Office of the Comptroller of the Currency (OCC) issued an interpretive letter in July that said federally chartered banks and thrifts — BNY Mellon is a federally chartered bank — may provide custody services for crypto assets.

"Enabling the use of digital assets is critical to transforming the future of custody," said Caroline Butler, head of custody at BNY Mellon, in a statement. "Our digital asset capabilities should help evolve the way the financial industry operates, including custody, collateral management, issuance, investment management and other segments where BNY Mellon is a key service provider."

No clear word yet on whether BNY's cryptocurrency custodial services will extend to the advisors that use BNY Pershing, a bank subsidiary, as a custodian.

Fidelity Digital Assets

Fidelity Investments is the only major financial institution with a custodial platform for digital assets. Fidelity Digital Assets currently provides custody services for Bitcoin only, but the firm has plans to extend the platform to include other digital assets in the future and lets clients pledge Bitcoin as collateral for cash loans provided by BlockFi, a cryptocurrency lending platform.

Fidelity also accepts Bitcoin and other digital currencies as contributions to Fidelity Charitable, its donor-advisor fund, and in August launched a Bitcoin Fund that's available to accredited investors only.