Bank of New York Mellon, the oldest bank in the country, is jumping into the market for cryptocurrencies.
The BK holding bank,
said Thursday that it will hold, transfer and issue bitcoin and other cryptocurrencies on behalf of its asset management clients. Over time, BNY Mellon will allow these digital assets to go through the same plumbing used by other, more traditional managers – from U.S. Treasurys to technology stock – using a platform that is now in prototype. The bank is already discussing plans with futures to introduce their digital currencies.
“Digital assets are growing as part of the mainstream,” said Roman Regelman, chief executive officer of BNY Mellon’s asset and digital services.
It is a big step for Wall Street back office banks, with their concerns about regulatory, legal and stability risks leaving them unwilling to engage directly with crypto markets. But as the prices of bitcoin and other digital assets have continued to rise, they have become increasingly popular with asset managers, hedge funds and other institutional investors.
See: Who owns bitcoin? About 80% is held by long-term investors: a report
BNY Mellon is not the first big name financial company to confirm its interest in digital assets. Fidelity Investments announced plans in October 2018 to store and trade bitcoin and ether, another digital currency, and a year later won a regulatory license to operate its crypto business in New York.
But the news at BNY Mellon marks the first time that one of the major banks has seized a roadmap for handling digital currencies like any other asset. And the bank has not limited the types of digital assets that allow clients to store there. BNY Mellon plans to begin offering these capabilities later this year.
See: Mastercard to allow buyers to accept certain cryptocurrencies directly later this year
In January, the Office of the Currency Regulator issued a directive stating that banks could use blockchain networks and other so-called stables to perform certain tasks. Stables are like currencies backed by fiat currencies and other traditional assets. In its letter, the GRO said they could be used to make payment possible.
An expanded version of this story appears on WSJ.com.