Key Takeaways
- BNY Mellon is close to offering Bitcoin custody services for ETFs.
- The SEC softened its stance on the controversial SAB 121 accounting rule.
- BNY Mellon still requires other regulatory approvals to proceed.
The Bank of New York Mellon (BNY) is advancing toward offering custody services for Bitcoin and Ether exchange-traded fund (ETF) clients.
This follows a decision by the U.S. Securities and Exchange Commission (SEC) to ease its requirements around the controversial Staff Accounting Bulletin (SAB) 121.
SAB 121
SAB 121, introduced in April 2022, mandates that companies holding client Bitcoin must list those assets as liabilities, a guideline that has caused considerable frustration within the U.S. Bitcoin industry.
After a review, the SEC’s Office of the Chief Accountant determined that BNY Mellon did not need to follow SAB 121, clearing the way for the bank to move forward.
In a statement, the SEC clarified that,
Certain broker dealers and custody banks have sufficiently demonstrated to SEC staff that their fact patterns are different from those described in SAB 121.
The difference comes down to whether provided customers receive adequate asset protection.
However, BNY Mellon still requires authorization from additional regulators before fully offering custody services.
The bank said:
[It] has engaged, and will continue to engage, its banking regulators to offer custody services to crypto ETP clients at scale.
The controversy around SAB 121 has persisted since its introduction, leading to political pushback, legislation, and even a veto from President Biden after Congress passed a measure to overturn it.
