BNY Mellon Gets SEC Crypto Exemption, Sparking Concerns

BNY Mellon, the largest custodian bank in the U.S., has reportedly secured an exemption from the SEC's Accounting Bulletin 121 for its institutional crypto custody operations.

BNY Mellon, the largest custodian bank in the U.S., has reportedly secured an exemption from the SEC’s Accounting Bulletin 121 for its institutional crypto custody operations.

This information came to light during an update from Chris Land, an aide to Senator Cynthia Loomis, who mentioned that the SEC has approved BNY Mellon’s participation in digital asset custody. Land stated that BNY Mellon is eager to expand its role in crypto custody but has faced challenges with Staff Accounting Bulletin (SAB) 121. The SEC has apparently granted the bank an exemption to proceed.

SAB 121 mandates that crypto custodians record cryptocurrency holdings on their balance sheets along with a corresponding liability, a requirement widely criticized as burdensome. However, Paul Munter, the SEC’s Chief Accountant, disclosed that the agency has conditionally exempted certain banks and brokerages using blockchain technology from this rule.

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Although the bank was not explicitly named, it is believed that BNY Mellon is among those granted relief, with conditions such as cooperating with U.S. regulators to safeguard client assets in the event of bankruptcy.

This development has raised fairness concerns, with Wyoming Select Committee Chairman Cyrus Western criticizing the SEC’s preferential treatment of large institutions like BNY Mellon. He highlighted the difficulties smaller companies, such as Custodia and Kraken, face in navigating the same regulations. While larger firms benefit from regulatory exemptions, smaller players remain on the sidelines.

BNY Mellon’s involvement is seen as a signal of increasing institutional interest in the crypto space, potentially paving the way for more established players to enter the market.

Alexander Zdravkov

Alexander has been working in the crypto industry for three years, during which time he has established himself through his active participation in monitoring market dynamics and technological innovations. His interest in cryptocurrencies and new technologies is not just a professional commitment, but a deep personal passion. He follows the news in the sector daily, analyzes trends, and is excited about every new step in the development of blockchain solutions. His enthusiasm drives him to continuously learn and share knowledge, as he sees the future in digital finance and its role in global transformation.