The utilization of digital assets by major financial platforms has been accelerating, after Paypal and Mastercard recently announced they would begin allowing users to conduct transactions using certain cryptocurrencies. Now, it appears that the oldest bank in America has also jumped on the cryptocurrency craze, and will begin storing Bitcoin on behalf of its asset-management clients.
On Thursday, the Bank of New York Mellon announced it will start holding, transferring, and issuing Bitcoin and other cryptocurrencies for its asset-management clients. Eventually, the platform, which is currently in a prototype stage, will also allow those digital assets to be passed through various other traditional holdings, including Treasury’s and technology stocks. Indeed, this is a significant step for one of Wall Street’s major banks, given the current legal, regulatory, and stability risks stemming from crypto markets.
However, as prices of Bitcoin and other major cryptocurrencies continue to rise, their popularity among asset managers, hedge funds, and other institutional investors has been increasing. “Digital assets are becoming part of the mainstream,” said BNY Mellon chief executive of asset-servicing and digital businesses Roman Regelman. The bank’s latest announcement is the first of its kind to unveil a roadmap for eventually treating cryptocurrencies like all other assets, with plans to begin offering those services later in 2021.
BNY Mellon has also designated a team of executives to determine how digital assets can be incorporated into all of the bank’s businesses. Despite this however, Regelman anticipates that it will be another three to five years before the use of digital assets will become fully mainstream in Wall Street’s traditional infrastructure.
Information for this briefing was found via the WSJ. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.