As a seasoned researcher who has closely followed the evolution of Bitcoin and the crypto market over the past decade, I find this recent development with BNY Mellon to be a significant milestone. The SEC’s exemption for America’s largest custodian bank from SAB 121 could indeed pave the way for wider adoption of Bitcoin and other cryptocurrencies by traditional financial institutions.
In a major advancement, BNY Mellon becomes the first bank to be granted an exception by the Securities and Exchange Commission (SEC) from SAB 121, paving the way for Bitcoin (BTC) integration, potentially impacting the crypto market, traditional banking sector, and more.
Earlier this week, the initial news about it was brought up during a public hearing of the Wyoming Select Committee on Blockchain, Financial Technology, and Digital Innovation by Unchained first.
Is Bitcoin And Crypto Adoption Ready To Explode?
During the testimony of Chris Land, the general counsel for pro-Bitcoin U.S. Senator Cynthia Lummis, BNY Mellon, the largest custodian bank in America, was given emphasis.
It was verified that Bank of New York (BNY) is not bound by the rules of SEC’s SAB 121, a regulation that necessitates financial institutions to list cryptocurrencies held in custody as assets on their balance sheets and create matching liabilities.
According to Land’s statement, BNY Mellon is considering increasing its participation in the field of cryptocurrency custody services. This move not only indicates a major strategic change for the bank towards institutional management of digital assets but also hints at a broader expectation that Bitcoin’s adoption will broaden the service range and client base of these financial institutions.
Additionally, Unchained highlights that the SEC’s exemption granted to BNY Mellon could serve as a precedent for other financial institutions to delve into similar ventures. However, it’s important to note that under the SEC’s SAB 121, custodians must include Bitcoin or other digital assets in their balance sheets, an aspect that has been reportedly difficult for numerous banks to manage.
In a recent statement, Paul Munter, head of the Securities and Exchange Commission’s accounting department, suggested that some exemptions might be possible under specific circumstances, which were not mentioned in the original report.
Industry Giants Weigh In
Under the watchful eye of both the New York Department of Financial Services (NYDFS) and the Federal Reserve, BNY Mellon functions. These entities play crucial roles in ensuring that BNY Mellon adheres to regulations and maintains an effective operational structure.
Land clarified that the Federal Reserve would not object to Bank of New York (BNY) entering the digital asset custody sector, though the specific conditions or expectations are still somewhat unclear.
Chair Cyrus Western of Wyoming’s committee expressed doubts about whether Bank of New York (BNY) would have to acquire New York’s BitLicense, a regulation for cryptocurrency businesses in the state. He also hinted that BNY could potentially claim that federal banking laws overrule state regulations such as the BitLicense.
According to the report, BNY Mellon’s exemption from certain regulations in the cryptocurrency sector has sparked concerns among competitors like Custodia Bank and Kraken, who view it as potential “unfair regulation.
Western noted that although institutions such as Custodia Bank have followed the regulations and aimed for transparency, they perceive themselves being overshadowed by bigger players like BNY Mellon.
In a more optimistic outlook, Michael Novogratz, head of Galaxy Digital, suggested that the Securities and Exchange Commission’s exemption might indicate a trend towards inviting conventional banks to participate more actively in the cryptocurrency sector.
This corresponds to Robin Vince’s recent remarks as BNY Mellon’s CEO, discussing the bank’s readiness to take on a more significant part in the digital assets sector.
Currently, Bitcoin is being transacted at around $63,000, showing a decline of almost 2% over the past 24 hours.
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2024-09-20 23:12