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- BNY Mellon becomes the first bank with the SEC exemption from crypto accounting rules.
- SEC’s variance for BNY Mellon could open doors for more banks in crypto.
BNY Mellon has emerged as a pioneer in the cryptocurrency custody industry, becoming the first bank to be excluded from the SEC’s Staff Accounting Bulletin No. 121 (SAB 121). This significant development was announced during a public hearing in Wyoming’s Select Committee on Blockchain, Financial Technology, and Digital Innovation Technology.
SEC’s Landmark Exception: BNY Mellon Navigates SAB 121 with Ease
The SEC granted BNY Mellon a “variance” from the SAB 121 accounting requirements. This exception allows BNY Mellon to provide institutional crypto custody services, including Bitcoin, as part of its core business activities. Chris Land, general counsel for U.S. Senator Cynthia Lummis (R-WY), testified:
“[BNY] is looking to get more involved in the crypto custody business. They had some problems with Staff Accounting Bulletin (SAB) 121, and the SEC has apparently given them some kind of variance from SAB 121 to move forward.”
This decision marks a watershed moment for the bank and the whole crypto industry, indicating a shift in regulatory views toward traditional financial institutions that engage in digital asset custody.
SAB 121, which has been the subject of discussion in the financial sector, requires banks that hold cryptocurrencies on behalf of clients to register these assets as liabilities on their balance sheets.
Many in the crypto sector regard this rule as cumbersome, as it adds significant financial risk to any institution that engages in crypto custody.
SEC’s Exemption Sparks New Opportunities for Traditional Banks in Crypto
BNY Mellon’s exemption from this legislation might be a game changer, opening the door for other traditional banks to enter the cryptocurrency industry.
This exemption not only represents a watershed moment for BNY Mellon, but it could also dramatically increase institutional participation in the crypto business, lowering entrance barriers for banks that have been cautious owing to regulatory concerns.
The decision may serve as a stimulus for greater acceptance of crypto services by large financial institutions, indicating a mature market in which digital assets are increasingly regarded as viable investment possibilities.
This is not BNY Mellon’s first foray into the crypto and blockchain industry. Last year, in a Swift-led project revealed by CNF, BNY Mellon and Deutsche Bank worked together on the interoperability of electronic Bills of Lading (eBL) on blockchain.
This program sought to improve commercial efficiency by incorporating blockchain technology into traditional financial systems.
Such agreements demonstrate BNY Mellon’s continuous commitment to using blockchain technology to improve financial processes, cementing the company’s position as a pioneer in integrating crypto and blockchain solutions into traditional banking.
While BNY Mellon is making progress in crypto custody, other industry titans are also strengthening their standing in the crypto area. For example, as we previously highlighted, MicroStrategy’s Bitcoin holdings currently total 252,220 BTC after a new 7,420 BTC purchase, confirming its position as a leader in institutional BTC investment.
