In a significant development for bitcoin (btc), the broader cryptocurrency market, and the traditional banking industry, BNY Mellon has been identified as the first bank to receive an exemption from the Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 121.
Unchained first reported the announcement during a public hearing of the Wyoming Select Committee on Blockchain, Financial technology and Digital Innovation earlier this week.
Are you ready to explode in the adoption of bitcoin and other cryptocurrencies?
BNY Mellon, the largest custodian bank in the United States, was highlighted during testimony by Chris Land, general counsel to pro-bitcoin US Senator Cynthia Lummis.
Land confirmed that the SEC has exempted BNY from the requirements of SAB 121, which requires financial institutions that hold custody Cryptocurrencies They must record these digital assets on their balance sheets and create corresponding liabilities.
Land said: “BNY is looking to become more involved in the cryptocurrency custody business,” indicating not only a significant shift in the bank’s strategy toward institutional digital asset management, but also a broader sense of anticipation for bitcoin adoption to expand the reach and offerings of these institutions to their clients.
Unchained also notes that the SEC's exemption for BNY Mellon could pave the way for other Financial institutions to explore similar opportunities. Still, SEC SAB 121 requires custodians to account for bitcoin or other cryptoassets on their balance sheets, which has reportedly been a challenge for many banks.
However, the Securities and Exchange Commission's chief accountant, Paul Munter, recently indicated that certain exceptions could apply under certain conditions that were not disclosed in the report.
Industry giants weigh in
BNY Mellon operates under the supervision of the New York Department of Financial Services (NYDFS) and the Federal Reserve, which plays a key role in its compliance and operational framework.
Land stressed that the Fed should have granted a no-objection to BNY's entry into the digital asset custody sector, although the exact requirements remain somewhat ambiguous.
Wyoming Select Committee Chairman Cyrus Western expressed concern about whether BNY would need to obtain New York's BitLicense, a regulatory requirement for cryptocurrency companies operating in the state. Land suggested that BNY could argue that federal banking laws get ahead of state regulations such as the BitLicense.
According to the report, the exemption granted to BNY has raised suspicions among other cryptocurrency companies such as Custody The bank and cryptocurrency exchange Kraken have expressed frustration over what they perceive as “regulatory favoritism.”
Western said that while companies like Custodia Bank have played by the rules and sought to operate transparently, they feel marginalized in favor of larger institutions like BNY.
On a more positive note, Michael Novogratz, CEO of Galaxy Digital, speculated that the SEC exemption could signal a shift that encourages more traditional banks get involved in cryptocurrencies.
This is in line with BNY Mellon CEO Robin Vince’s recent comment on the bank’s preparations to take a more active role in the digital asset space.
At the time of writing, bitcoin is trading at $63,000, recording losses of almost 2% in the 24-hour time frame.
Featured image of DALL-E, chart from TradingView.com
