BNY Mellon has set up a new unit dedicated to building the industry’s first integrated multi-asset digital custody and administration platform to cater for the rapidly evolving digital assets space.
The team will be led by Mike Demissie, head of advanced solutions at BNY Mellon, and will be responsible for accelerating the development of enterprise solutions for digital assets, including cryptocurrencies.
BNY Mellon plans to offer its new digital assets custody and administration services later this year.
“BNY Mellon is proud to be the first global bank to announce plans to provide an integrated service for digital assets,” said Roman Regleman, CEO of Asset Servicing and head of digital, BNY Mellon.
With activity in the digital and crypto assets taking off dramatically over recent months, many institutional investors have still been held back from entering the space due to the lack of traditional and established service providers in the market.
According to a survey of 800 institutional investors from Fidelity in June last year, over a third of US and European respondents have included digital assets in their investment portfolio. A further 60% of investors, including family offices, pension funds, hedge funds, and high net worth investors, said they are open to add digital assets to their future investments.
Subsequently, custodian banks have faced calls to prepare for a service offering should the regulatory, legal and risk frameworks come into place for investing in digital assets.
“Clients prefer to work with a trusted service provider that they have been relying on for all of their traditional assets, and don’t want to go elsewhere to gain exposure,” Demissie told The TRADE’s sister publication, Global Custodian. “What makes our offering more compelling is they can use the full offering of the franchise, starting with custody.”
The new unit plans to provide an infrastructure to service the entire trade lifecycle of a digital asset, including issuance, transferring and safekeeping. It will also leverage on BNY Mellon’s advanced solutions such as blockchain – the technology behind digital assets – while also looking at ways to improve custody and other investment services, as well as its asset management offerings.
BNY Mellon made its first foray into the digital asset servicing space in 2019 through a partnership with Bakkt, the digital currency exchange operated by US exchange ICE to set up private key storage.
The launch of the service comes as other custodian banks have stepped up their involvement in the digital assets space.
In December last year, Standard Chartered and Northern Trust announced they would partner to launch a separate entity called Zodia that would offer cryptocurrency custody services for institutional investors.