BNY, the world’s largest custody bank, told Bloomberg that the SEC confirmed it can provide cryptocurrency custody for asset managers issuing exchange traded products (ETPs) without including those assets on the BNY balance sheet.
In 2022 the Security and Exchange Commission (SEC) published staff accounting bulletin (SAB) 121, which said listed firms had to include crypto under custody on the custodian’s balance sheet. That’s unheard of given the assets do not belong to the custodian. For banks it’s prohibitive because of regulatory rules relating to their balance sheets.
This is the reason why no banks provide custody for the $50 billion of U.S. Bitcoin ETFs and the more recent Ether ETFs. Given BNY has almost $50 trillion in assets under custody, it has more battle hardened security and a larger security budget compared to crypto firms.
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