Bank of New York Mellon enters a crypto custody services business. This is the first bank in the US that has received a "go ahead" signal from the SEC. This is not full crypto custody service. There are limitations. However, this is a first step for banks to get involved in safeguarding crypto assets for their clients. It is definitely an important milestone both for banks and crypto.
BNY Mellon is one of the biggest investment banks and has tens of trillions of dollars worth of assets under its control. Money and financial services is their business. It makes perfect sense for a big bank such as BNY Mellon to enter the crypto space and build new services in the space. Crypto custody would be one of the most obvious ones that any bank would want to be involved. After all that's what banks do, they make money by just being involved in the money systems. BNY Mellon is not the only one that had interest in providing crypto custody services. Many banks have expressed this desire, especially after the approval of the bitcoin ETFs. Not only we have bitcoin ETFs, but we also have Eth ETFs as well. We will probably see more crypto assets getting spot ETFs approved in the future. Not considering crypto custody services would be a mistake for any bank. BNY Mellon appears to be the first one that received an approval from the SEC.
This doesn't mean BNY Mellon will become a crypto custodian for everybody. They will be able to offer custody services for ETFs. This is still big, and only the beginning. BNY Mellon may be in money business for a very long time and have all the financial expertise, but they are still new in crypto. While I don't doubt they have all the resources, talents, and money to be successful in this space, there is still learning curve and they still have to prove that they will be reliable custodians of these scarce assets like bitcoin. Now Coinbase has a competition. About time!
Coinbase have had a good run in crypto space and have build themselves a good reputation as custodians of crypto assets. It is not my favorite company. There so many things that are wrong with Coinbase and its leadership. But they have done well in the space and secured themselves crypto custody deals with bitcoin spot ETFs. They may have enjoyed sort of a monopoly. The time for competition was going to arrive sooner or laters. Coinbase maybe an expert in safeguarding crypto assets, but they are not in the big banks club. If BlackRock and Fidelity types were to chose they probably would go with one of their own. Hence, BNY Mellon makes sense. It doesn't mean BlackRock or Fidelity have deals in place. I am just guessing at some point they will move to different players, or maybe even diversify.
It is highly unlikely BNY Mellon will remain as the only bank that can offer crypto custody services. This seems like a beginning of banks being allowed to make money in crypto. I almost certain we will see more banks being involved in near future. Time have changed. There was a time when banks would call bitcoin and crypto a scam, a fraud, a nothing. It always made sense that banks would have to be involved in crypto or bitcoin at some point. In what form, that has been the question.
Ever since the emergence of bitcoin and new decentralized money, the core topic has always been banks vs crypto. Bitcoin and crypto are here to replace banks. It it true. Bitcoin or other decentralized crypto networks already are the alternatives for banks. There is no need for a bank. People, organizations, companies, governments can store and manage their wealth in their own wallets without a need for third party banks. That still is the case. It is still a possibility in a far future there will be no need for banks at all. However, in a near future banks are a necessity. And there is no need to break things that have been working. Smooth and safe transition would be a better options however long it may take.
That said, it is clear by now that bitcoin is nothing something banks and financial institutions should fight and waste energy going against it. They wouldn't be able to destroy bitcoin anyway and time has proven that. Better approach would be to participate in the network and integrate this new technology on things they do. Crypto custody is only one way banks can participate. At this stage it is starting with custody of crypto assets in stop ETFs. Then this can move to full crypto custody regardless the assets are in the ETFs or not. They offering the same services to everybody. Perhaps in the future the custody of assets will be simple enough for everybody. Today it seems there is a demand for crypto custody services. This may even be a security necessity for many institutions to be involved.
It also seems like bitcoin and crypto is being hijacked by the big money. BlackRock is hoarding as much bitcoin as they can, MicroStrategy is buying up every opportunity they get, big institutions considering their potions, now banks want to be involved in crypto custody. Is big money going to take over the bitcoin and other major crypto assets. Perhaps, maybe, kinda, but not really. Bitcoin is an open network just like other decentralized networks. We like it or not everybody is free to participate. That's what makes them great networks and money. Involvement of big money and those who have controlled all the money was always inevitable. Sooner or later they would see the benefits, and realize joining the network would benefit them more than fighting it. That too adds value. Bitcoin may seem expensive for retail nowadays, but it was always meant to appreciate in value. That's what strong money does. Today psychological barriers in seeing the value in accumulating Sats (because they are not full coin), but at some point this will become a norm and will continue benefiting all. Because it offers ownership, transparency, and immutability.
I am sure we will see more banks, companies, institutions, and sovereign funds getting involved in crypto and bitcoin. But we also see more adoption among ordinary people. Interestingly, price of bitcoin has been stuck at and around 60k for months now. It is hard to predict the future, but fact remains when it comes to bitcoin numbers go up. Next three months should be really interesting. If not, I quit.
