BNY Mellon Launches Bitcoin and Ethereum Custody Services for Investment Firms

BNY Mellon Launches Bitcoin and Ethereum Custody Services for Investment Firms

BNY Mellon will start to hold on Bitcoin And the Ethereum on behalf of its clients with software developed in conjunction with encrypted preservation provider Fireblocks.

The service was rolled out on the bank’s accounting platform today for select investment firms, according to a report in The Wall Street Journal. This means that BNY Mellon will store clients’ private keys and provide some bookkeeping on the crypto assets in their portfolios.

The bank will use Chainalysis’ compliance software, including KYT (Know Your Transaction), a due diligence survey tool and another tool to assess the volume of transactions and counterparties.

“Throughout this process, we have worked closely with market-leading fintech companies, leveraging digital asset tech professionals Fireblocks and Chainalysis to integrate their technology in order to meet the current and future security and compliance needs of clients across the digital asset space,” BNY Mellon spokesperson Steve said. La Marca Decrypt in a letter.

He said that customers with accounts on the bank’s platform will only be able to hold digital assets, if they choose to, and that the bank will add support for more crypto assets “based on customer demand, commercial opportunity and regulatory guidance.”

It is the latest and perhaps the biggest step forward in the US cryptocurrency market from the oldest bank in the country.

BNY Mellon and Cryptocurrency

In February 2021, BNY Mellon announced plans to hold cryptocurrencies on behalf of its customers. A month later, the bank launched a bitcoin custodian service in Ireland – much to the chagrin of Irish Central Bank officials.

In March, BNY Mellon became the custodian of the cash reserves supporting the department stablecoinDollar coin. And in February, the bank announced that it had begun using the Chainalysis compliance program, noting at the time that it was a precursor to the ultimate custody service.

“Chainalysis has long believed that financial institutions have a critical role in the overall growth and success of the cryptocurrency industry,” Jonathan Levine, co-founder and chief security officer of Chainalysis, said in a statement.

according to 2nd Quarter Earnings Report. Acting as a custodian, which is the company’s core business, usually involves providing less active allotment or financial advice.

The bank formed its new digital asset unit last February, after which it said it would “accelerate the development of enterprise solutions to serve the rapidly evolving digital asset space.”

Last April, Michael Shaulof, CEO and co-founder of Fireblocks, spoke about the difficulties of developing a crypto-saving solution on the BNY Mellon Perspectives podcast.

Whereas SWIFT, an international financial services network, can take two or three days to settle a transaction – giving analysts plenty of time to verify it – crypto transactions are settled within seconds or minutes. This means that cryptocurrency custodians face two main problems, he said.

“The first is, really, how do you secure that private key while you’re at rest, because that’s basically what ensures that you, you know, sleep with 100 Bitcoins in that wallet, and wake up with 100 Bitcoins still there,” Shaulov said. podcasts. “And the second issue, which I think a lot of people don’t really think of in this context, is that the hardest part in the end is making sure you’re moving it to the right location.”

Tuesday’s news makes BNY Mellon one of several Wall Street clients to announce crypto news amid the bear market.

In August, BlackRock launched a private bitcoin fund for its institutional clients in the United States and announced a partnership with Coinbase Prime. Last month, Nasdaq said it was working on its own institutional crypto custody service, and Fidelity said it might offer Bitcoin to retail investors.

Editor’s Note: This article has been updated after publication to include the comments of a BNY Mellon spokesperson.

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