BNY Mellon Appears to Have Received SEC Approval to Offer Institutional Crypto Custody Services

Testimony from Chris Land, general counsel for US Senator Cynthia Lummis, indicated that BNY Mellon had received a “variance” from complying with the SEC’s Staff Accounting Bulletin (SAB) 121.

America’s largest custodian bank, BNY Mellon, has reportedly secured approval from the Securities and Exchange Commission (SEC) to venture into the institutional crypto custody arena.

During a Wyoming public hearing, testimony from Chris Land, general counsel for US Senator Cynthia Lummis, revealed that BNY Mellon had been granted a “variance” from the SEC regarding its Staff Accounting Bulletin (SAB) 121. This regulation mandates that entities like banks must include crypto assets in their custody on their balance sheets, accompanied by a corresponding liability.

The crypto industry has maintained that this rule, intended to govern traditional financial instruments, poses a significant hurdle for banks seeking to enter the crypto custody business. However, BNY Mellon, overseen by the Federal Reserve and New York’s Department of Financial Services, seems to have found a way around this obstacle.

Land’s testimony further indicated that the SEC and Federal Reserve have raised no objections to BNY’s digital assets custody plans, and the bank might argue for an exemption from New York’s BitLicense, which Land stated could be preempted by federal banking law.

This development could pave the way for BNY Mellon to commence offering institutional crypto custody services, a move that would likely accelerate institutional crypto adoption.

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