Bank of New York Mellon enters a crypto custody services business. This is the first bank in the US that has received a "go ahead" signal from the SEC. This is not full crypto custody service. There are limitations. However, this is a first step for banks to get involved in safeguarding crypto assets for their clients. It is definitely an important milestone both for banks and crypto.
BNY Mellon is one of the biggest investment banks and has tens of trillions of dollars worth of assets under its control. Money and financial services is their business. It makes perfect sense for a big bank such as BNY Mellon to enter the crypto space and build new services in the space. Crypto custody would be one of the most obvious ones that any bank would want to be involved. After all that's what banks do, they make money by just being involved in the money systems. BNY Mellon is not the only one that had interest in providing crypto custody services. Many banks have expressed this desire, especially after the approval of the bitcoin ETFs. Not only we have bitcoin ETFs, but we also have Eth ETFs as well. We will probably see more crypto assets getting spot ETFs approved in the future. Not considering crypto custody services would be a mistake for any bank. BNY Mellon appears to be the first one that received an approval from the SEC.
This doesn't mean BNY Mellon will become a crypto custodian for everybody. They will be able to offer custody services for ETFs. This is still big, and only the beginning. BNY Mellon may be in money business for a very long time and have all the financial expertise, but they are still new in crypto. While I don't doubt they have all the resources, talents, and money to be successful in this space, there is still learning curve and they still have to prove that they will be reliable custodians of these scarce assets like bitcoin. Now Coinbase has a competition. About time!
Coinbase have had a good run in crypto space and have build themselves a good reputation as custodians of crypto assets. It is not my favorite company. There so many things that are wrong with Coinbase and its leadership. But they have done well in the space and secured themselves crypto custody deals with bitcoin spot ETFs. They may have enjoyed sort of a monopoly. The time for competition was going to arrive sooner or laters. Coinbase maybe an expert in safeguarding crypto assets, but they are not in the big banks club. If BlackRock and Fidelity types were to chose they probably would go with one of their own. Hence, BNY Mellon makes sense. It doesn't mean BlackRock or Fidelity have deals in place. I am just guessing at some point they will move to different players, or maybe even diversify.
It is highly unlikely BNY Mellon will remain as the only bank that can offer crypto custody services. This seems like a beginning of banks being allowed to make money in crypto. I almost certain we will see more banks being involved in near future. Time have changed. There was a time when banks would call bitcoin and crypto a scam, a fraud, a nothing. It always made sense that banks would have to be involved in crypto or bitcoin at some point. In what form, that has been the question.
Ever since the emergence of bitcoin and new decentralized money, the core topic has always been banks vs crypto. Bitcoin and crypto are here to replace banks. It it true. Bitcoin or other decentralized crypto networks already are the alternatives for banks. There is no need for a bank. People, organizations, companies, governments can store and manage their wealth in their own wallets without a need for third party banks. That still is the case. It is still a possibility in a far future there will be no need for banks at all. However, in a near future banks are a necessity. And there is no need to break things that have been working. Smooth and safe transition would be a better options however long it may take.
That said, it is clear by now that bitcoin is nothing something banks and financial institutions should fight and waste energy going against it. They wouldn't be able to destroy bitcoin anyway and time has proven that. Better approach would be to participate in the network and integrate this new technology on things they do. Crypto custody is only one way banks can participate. At this stage it is starting with custody of crypto assets in stop ETFs. Then this can move to full crypto custody regardless the assets are in the ETFs or not. They offering the same services to everybody. Perhaps in the future the custody of assets will be simple enough for everybody. Today it seems there is a demand for crypto custody services. This may even be a security necessity for many institutions to be involved.
It also seems like bitcoin and crypto is being hijacked by the big money. BlackRock is hoarding as much bitcoin as they can, MicroStrategy is buying up every opportunity they get, big institutions considering their potions, now banks want to be involved in crypto custody. Is big money going to take over the bitcoin and other major crypto assets. Perhaps, maybe, kinda, but not really. Bitcoin is an open network just like other decentralized networks. We like it or not everybody is free to participate. That's what makes them great networks and money. Involvement of big money and those who have controlled all the money was always inevitable. Sooner or later they would see the benefits, and realize joining the network would benefit them more than fighting it. That too adds value. Bitcoin may seem expensive for retail nowadays, but it was always meant to appreciate in value. That's what strong money does. Today psychological barriers in seeing the value in accumulating Sats (because they are not full coin), but at some point this will become a norm and will continue benefiting all. Because it offers ownership, transparency, and immutability.
I am sure we will see more banks, companies, institutions, and sovereign funds getting involved in crypto and bitcoin. But we also see more adoption among ordinary people. Interestingly, price of bitcoin has been stuck at and around 60k for months now. It is hard to predict the future, but fact remains when it comes to bitcoin numbers go up. Next three months should be really interesting. If not, I quit.
For the value of crypto, and Bitcoin in particular, to increase in value substantially, it's almost necessary that banks become involved. Crypto right now is still not that easy to use.
If you lose your keys it's over. And that's a major problem.
For the people with a lot of money, they will want security for their crypto. Not just a hidden cold storage wallet in a safe or somewhere. They will want it insured and secure backups of keys and all sorts of things.
Also, people to manage their investments and buy when appropriate.
To reach a future where we don't need banks, it will have to get a lot easier to use, with more secure options.
Many of us seem to forget the extreme learning curve of crypto and the fear at various times of losing your keys.
The more options for people the better. There are risks and benefits for both self custody and using other services as well. One of the reasons I like Hive is that self custody is super easy and security is high. My long time wish was having an ability to store bitcoins and other coins within a Hive wallet. Now that would make self custody super easy for all.
It is very interesting to see how little by little, every financial institution is positioning itself to enter the crypto world and offer services. I am sure the mass market will join through banis and financial institutions, the nice thing, as you mention, everyone can join directly, so those vetoed by the regular financial world still have an open door to enter and participate and this is a huge advancement on shrinking social differences and giving the same opportunities to everyone.
I am convinced, more and more " individual financial crypto consulting services" will appear competing with regular banks lowering even more the entry barrier.
I just discovered this documentary published a few weeks ago. It is a very nicely produced piece of media explaining all the implications of Bitcoin and Crypto in society.
https://www.godblessbitcoin.com/watch/
Great article. Are you familiar with Base from
Coinbase? Great traffic everyday, they are doing all right.
I think I've heard about it. Is it their blockchain?
It's their very own eth L2 chain. Many tokens there, many use cases. Works fast. And very low gas fees.
I don't really like Coinbase, and I don't trust them. However, it is good to know they are involved in development as well.
For sure. Big player have always even bigger plans.
BNY Mellon bank has a lot of money so if they launch crypto service the price of crypto will increase and at the same time transactions will increase. It will be very beneficial for crypto
Banks have been willing to get their hands on crypto and this will even make that happen more
We’d get to see more banks and industries in the crypto world
I won’t be shocked if it gets revealed that there are so many banks, companies and greater people who talk down on BTC actually have so many BTCs staked in their wallets…
They may have to declare that they have btc in reserves though.
I think it will be interesting to see. I think it's a good thing that the banks are more willing to accept crypto as an asset with these types of changes, but I have a feeling that they are just acting as a middle man to collect the fees.
This is a good news for btc 💰
It just actually looks like the banks daily are envying the crypto space
Crazy that the bill for all banks got vetoed but now special treatment is given out.
agree with your comments, also coinbase is high fees
Sooner or later they will be involved in cryptos.
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