- Bank of New York Mellon will soon issue, hold, and transfer bitcoin for clients, The Wall Street Journal reported.
- The move marks a major step forward in Wall Street’s adoption of the cryptocurrency.
- Widespread acceptance of bitcoin by major banks should arrive in the next three to five years, a chief executive told The Journal.
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Bank of New York Mellon plans to issue, hold, and transfer clients’ bitcoin, The Wall Street Journal reported Thursday, marking a key development in bringing cryptocurrencies into the mainstream.
The firm – America’s oldest bank – will soon allow digital currencies to be treated the same as more orthodox investments in its asset-management system. Banks including BNY Mellon previously had to work with separate custodial firms to manage cryptocurrency holdings, Roman Regelman, CEO of BNY Mellon’s asset servicing and digital arms, told The Journal.
Bitcoin and other tokens have garnered new demand among the Wall Street establishment as institutional investors pile into the crypto market. Demand from fund managers helped bitcoin leap to record highs in early January.
Public companies have since joined the fray, buying up bitcoin as an alternative reserve asset. Most notably, Tesla announced Monday it bought $1.5 billion in bitcoin and would soon allow customers to buy vehicles with the token. The backing pushed bitcoin above $48,000 for the first time.
Bitcoin traded at $47,356 as of 9:10 a.m. ET Thursday, up 2.9% from 24 hours ago.
BNY Mellon is already prototyping a platform for allowing cryptocurrency transactions to use the same transfer systems as stocks and bonds, according to the report. The firm aims to begin offering such services later in 2021.
Full adoption of bitcoin and other digital tokens on Wall Street and its infrastructure will take another three to five years, Regelman told The Journal.
Bitcoin's rise in popularity has also led regulators to soften their stance on cryptocurrencies and their uses as alternative assets. The SEC is expected to approve the first bitcoin exchange-traded fund this year, further opening the market to institutional flows.
Separately, the Office of the Comptroller of the Currency said last month that banks could use blockchain-based currencies and stablecoins - digital tokens backed by fiat currencies - for certain transactions. Though the guidance doesn't directly affect bitcoin, it signals the government is increasingly accepting of digital currencies and their use cases.