Breaking: US SEC Greenlights BNY Mellon’s New Crypto Custody Plan

US SEC approves BNY Mellon crypto custody proposal to provide solutions for digital asset services in addition to Bitcoin and Ether ETFs via protected client assets. BNC’s digital asset subsidiary is seeking product offering approval from the United States SEC, while BNY Mellon has approved the crypto custody services, which include more than just bitcoin and Ethereum. To Increase safety BNY Mellon uses Separate Crypto Wallets Attached to Bank Accounts. The critics say BNY Mellon, benefited from SAB 121 rules.

Recently, the US Securities and Exchange Commission (SEC) allowed Bank of New York Mellon Corp (BNY Mellon) to launch services on digital assets that may extend beyond Bitcoin and Ether ETFs. According to SEC Chairperson Gary Gensler, BNY Mellon is piloting an approach to launch that doesn’t limit itself to certain cryptos, which reveal additional digital assets.

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US SEC Approves BNY Mellon crypto Custody Proposal

As reported in Bloomberg, the US SEC has seemingly given a ‘non-objection’ to BNY Mellon’s proposed custody structure through which the bank can hold digital assets without violating the rules. In particular, within the framework of the plan, BNY Mellon is to provide each client with a separate cryptocurrency wallet connected to a bank account to avoid the problems connected with the bank’s bankruptcy. 

This effort was made to prevent a mix-up of customers’ assets with the bank’s assets to meet the set legal requisites.

Gary Gensler noted that initially, BNY Mellon discussed bitcoin and ether with the US Securities and Exchange Commission. However, the endorsed structure is not limited to these two tokens. This makes it possible for BNY Mellon to perhaps, offer other types of custody services to other digital assets depending on the bank’s discretion, and within the prescriptive legal provisions.

BNY Mellon’s Custody Plan Aimed at Protecting Client Assets

The US Securities and Exchange Commission filed the structure, which reflects the importance of asset protection — a pivotal issue in bitcoin storage. To this, Gensler expressed his appreciation to BNY Mellon for its efficient structure that aims at safeguarding clients’ property within a corporate bankruptcy regime. 

This approval arrives when many crypto traders have fallen prey to insolvency scandals within other trading platforms such as Celsius Network, FTX, and Voyager Digital among others.

Therefore, other financial institutions can view BNY Mellon’s approach as a model to follow when it comes to digital assets custody. The SEC Chair also said that any other bank that would wish to adopt the same structure will receive equivalent regulatory treatment. However, the banks will still need to seek approval from their suitable supervisory authorities before engaging in the offering of digital asset custody.

SAB 121 Accounting Rules Remain a Point of Contention

It has drawn the ire of stakeholders in the crypto industry saying that BNY Mellon has been awardedpriority treatment. Under SAB 121, institutions must record the value of custodial crypto assets on their balance sheets and acknowledge an equal liability, a requirement that many in the industry oppose.

Yet, reports indicate that regulators have allowed BNY Mellon some wiggle room on these rules, which has ignited the resentment of crypto fans and other financial institutions.

Furthermore, US SEC Commissioner Hester Peirce and other market participants have objected to the bias, asserting that BNY Mellon does not suit all institutions for the no-action relief provided under SAB 121. Critics, including Caitlin Long, the CEO of Custodian Bank, argue that regulators should dismiss such rules.