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Crypto: BNY Mellon adds crypto to its $43 trillion custody business. Why that’s important for digital asset adoption

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Bank of New York Mellon, the world’s largest custodian bank, said it would start storing clients’ crypto assets as of Tuesday, despite the price mayhem of digital assets. 

The service allows certain clients to hold and transfer bitcoin
BTCUSD,
+0.12%

and ether
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-0.10%

through BNY Mellon, the lender said in a statement Tuesday. The addition makes BNY Mellon
BK,
-1.86%

the largest U.S. bank to offer safekeeping of both crypto and traditional assets.

Though bitcoin has lost almost 60% of its value year-to-date, “we continue to see significant demand from institutional investors and are excited about future opportunities from blockchain and tokenization technology for assets and cash,” Caroline Butler, chief executive of custody services at BNY Mellon, wrote to MarketWatch in an email. 

“BNY Mellon is signaling that they are going to tool up so that if a fund or fund manager wants to access crypto, they have the tools necessary to do that securely,” Chris Kline, chief revenue officer and co-founder of Bitcoin IRA, said in an interview. 

The move could boost institutional adoption for digital assets, as BNY Mellon, with $43 trillion assets under custody as of June, has existing relationships with many financial heavyweights. 

“For a public pension fund to be able to invest in this space, they are not going to look to custody their coins or tokens with an institution that they are not familiar with. It just brings additional risks,” Steve Russell, portfolio manager and senior research analyst at Emerald, said in an interview. 

“BNY Mellon is an institution that a lot of these public pension funds and financial institutions are used to working with. There’s a comfort level there,” Russell said. 

The bank’s move also indicated that it “at least thinks that the opportunity exists in that we will get regulation in the space that will allow institutional growth moving forward,” Russell added. 

Echoing the point, BNY Mellon’s Butler said that “we realize this is a new asset class and that the regulatory landscape is evolving. A focus on risk management is at the heart of our entire philosophy for digital assets.”

The bank “adheres to the highest standard of regulatory oversight available in the digital asset markets,” Butler wrote. 

BNY Mellon follows a similar move by BlackRock, which in August partnered with Coinbase to allow certain clients the ability to trade, finance and hold crypto assets in custody.

Bitcoin has lost 1.1% over the past 24 hours to around $19,028, according to CoinDesk data. Ether is trading at around $1,284, down 1.8% over the past 24 hours.

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