BNY Mellon (NYSE:BK), a bank with $2.2 trillion in assets under management, has announced the creation of a new Digital Assets unit that seeks to accelerate the development of solutions to help clients address growing and evolving needs related to the growth of digital assets, including cryptocurrencies. BNY Mellon is one of the oldest banks in the US with a legacy that dates back to the late 1700s. The bank is simply recognizing the growing demand for digital assets as customers and investors look to leverage the new technology or invest in cryptocurrencies like Bitcoin.
According to a statement from the bank, Mike Demissie, head of Advanced Solutions at BNY Mellon, is currently developing a client-facing prototype that is designed to be the industry’s first multi-asset digital custody and administration platform for traditional and digital assets. The team that he leads will be a cross-functional group addressing the various needs of crypto. The Digital Asset unit will incorporate solutions such as blockchain and is expected to improve custody and other investment services.
“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. Pending further evaluations and approvals, we expect to begin offering these innovative and industry-shaping capabilities later this year.”
Demissie said his unit will leverage BNY Mellon’s digital expertise and experience with Fintechs to speed up product development and help clients tap into the “best available solutions in the market.”
Caroline Butler, head of Custody at BNY Mellon, said the enabling the use of digital assets is critical to the transformation of custody.
“Building the bridge between the traditional and digital spaces will create a front-to-back ecosystem for innovation. 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.”
The announcement comes soon after Tesla announced it had acquired $1.5 billion worth of Bitcoin to hold on its books. Expectations are for other corporates to do the same. Other firms are already enabling crypto for payments and transfers.
BNY Mellon is certainly aware of the growing demand for digital asset services and prefers to be managing these services directly instead of outsourcing to other providers.
Meanwhile, the regulatory environment in the US remains somewhat opaque and concern exists regarding abuse of digital assets. Just yesterday, Secretary of the Treasury Janet Yellen said she worried about cryptocurrencies being utilized for nefarious activities. But banks like BNY Mellon are well aware of the strict compliance needs for all types of financial services. For big customers interested in utilizing or investing in digital assets, being able to have a single point of contact for the diverse realm of financial services may be preferable to dealing with multiple providers.