BNY Mellon and other Major Financial Institutions Continue to Make Strategic Investments in Digital Assets Space

Only a month after announcing that it was working on an integrated service for crypto-assets, BNY Mellon (NYSE:BK) has decided to make a strategic investment into crypto startup Fireblocks.

The New York-headquartered financial powerhouse, which is notably among the biggest banking institutions and also one of the largest employers in Pittsburgh, was a key investor in Fireblocks’ latest $133 million Series C investment round.

The move marked BNY Mellon’s first investment into Fireblocks’ fast-growing operations. The crypto startup said it will use the funds raised to further enhance its resources to serve some of the largest banks and Fintech firms. Fireblocks aims to link up these companies to the nascent crypto-asset capital markets.

Fireblocks’ platform aims to offer secure infrastructure for transferring, managing, and even issuing new crypto-assets. The crypto-focused firm, which also maintains head offices in New York, serves over 200 financial services providers and has managed to secure more than $400 billion in crypto-assets.

Last month, BNY Mellon had revealed that it had established a new digital assets division in order to support the development of a multi-asset digital custody solution. The bank also stated that it was working on an administration platform for more traditional assets like stocks and bonds. The bank intends to support digital assets such as cryptocurrencies like Bitcoin as well.

In statements shared with Biz Journals, Roman Regelman, Chief Executive at Asset Servicing and Head of Digital at BNY Mellon, explained that creating products to “bridge digital and traditional assets is foundational to the future of custody.”

Regelman added that after carrying out considerable due diligence and relevant market research, they realized that Fireblocks was offering great services that are focused on secure technology for supporting digital asset services.

BNY Mellon maintains over $41 trillion worth of assets under custody/administration and $2.2 trillion in AUM as of December of last year. The bank is notably one of the largest employers in  Pittsburgh with around 7,000 workers. BNY Mellon currently ranks second-and third-largest among major banking institutions in the 10-county metro (based on deposit market share). BNY  maintains two different spots because it has different charters for BNY Mellon NA and the Bank of New York Mellon.

It’s worth noting that many other large financial institutions have either directly invested or gained exposure in some way to crypto-assets. Or they’ve expressed some highly critical views regarding the use of Bitcoin and other cryptos to settle transactions or to serve as a medium-of-exchange.

In August 2018, Goldman Sachs had published a report stating that the Bitcoin price would keep declining. The giant Wall Street investment bank’s economic outlook report had noted that digital currency prices would fall since they are unable to function effectively as money.

However, Goldman had confirmed at that time that it was looking to launch its own crypto trading desk.

Recently, Goldman Sachs’ Bitcoin survey revealed that most investors are bullish on cryptos like BTC and Ethereum (ETH).

Goldman noted that the results of its client survey revealed that 61% of respondents believe their crypto-asset holdings could increase considerably in the next 12-24 months. Around 40% of respondents claimed they currently have some exposure to digital currencies.

Approximately 57% of Goldman Sachs’ survey respondents stated that the most important factor that led to a dramatic surge in the BTC price was “institutional investing or offering of additional products.”

Bitcointreasuries.org, a website that keeps track of Bitcoin purchases by different companies, reveals that there are at least 22 publicly listed firms that presently hold over $7 billion worth of Bitcoin.

Goldman Sachs’ survey was released shortly after the bank announced that its digital currency trading desk will become active after a 3-year pause. Goldman was reportedly just weeks away (as of early March 2020) from introducing BTC futures trading, and may be looking into providing a bitcoin exchange-traded fund (ETF) along with custody solutions for crypto-assets.

In addition to these developments, major financial institutions, fund managers, and other industry giants have submitted Bitcoin ETF applications.

As reported, the researchers at Bloqport have confirmed that only a month after launch, the first-ever Bitcoin ETF has reached $1 billion CAD in assets under management or AUM (as of March 20, 2021).

Bloqport added that the Purpose Bitcoin exchange-traded-fund or ETF now has a little over 14,195 BTC that’s  “physically-backed” and held in cold storage or offline wallets.

Bloqport believes that a U.S. Bitcoin ETF may “likely be at least 25X bigger.”

The researchers added:

“There are now at least 5 U.S. Bitcoin ETF applications awaiting approval: WisdomTree, VanEck, NYDIG Asset Management, Valkyrie Digital Assets, Skybridge and First Trust.  A decision by the SEC could come within the next 45 days for the first U.S. Bitcoin ETF.”

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