BNY Mellon plans to launch digital asset custody platform later this year

February 25, 2022 Coin Telegraph

BNY Mellon

The investment bank reportedly said it will begin with the United States and then expand worldwide based on market demand.

BNY Mellon, a major investment bank, is developing a digital asset custody platform that would allow institutional customers to gain crypto exposure.

According to a report from City A.M., customers will be able to store the world's most popular cryptocurrencies, Bitcoin (BTC) and Ether (ETH), in BNY Mellon crypto wallets which are powered by Fireblocks technology. However, once regulatory approval has been granted, the service will gradually increase and integrate a variety of tokenized traditional and digital assets.

The new service, according to the investment bank, is expected to be offered later this year. BNY Mellon also suggested it will be "the first to enter" the global digital custody market.

According to the report, Mellon intends to begin with the United States before expanding worldwide based on demand. After the American debut, BNY Mellon's Talia Klein predicted that the service might extend to the United Kingdom.

“I think what we’re seeing in the UK is that there’s a really vibrant and active digital assets market here.”

In February last year, the bank initially revealed its intentions to store, transfer, and issue Bitcoin and other cryptocurrencies as an asset manager on behalf of its clients. BNY Mellon announced a collaboration with Grayscale Investments in July 2021 to provide a range of services for its flagship Bitcoin investment product.

Remember that crypto is capable of exponential price moves is a very short amount of time. Add institutional adoption and network affects to BTC and there is a real possibility that a strong move to the upside can happen at anytime. #btc #eth #sol #Crypto
— The Meditative Mind (@aussieg7) February 22, 2022

As reported by Cointelegraph, BNY Mellon recently partnered up with Chainalysis, a blockchain data and analysis firm to utilize Chainalysis compliance software within its risk management system.

Few calls to ‘Buy The Dip’… but uber-rich Family Offices are keen on crypto

February 24, 2022 Coin Telegraph

Bitcoin dip

“Often the crowd unanimously call the dip/bottom earlier than the actual dip and the real bottoms forms when the crowd least expects which is represented by low to no mentions in Buy The Dip,” K J Lanaul wrote.

Short term social media data suggests that traders aren't calling for buying the Bitcoin (BTC) dip right now... but the long term picture is much brighter, with separate research showing that 77% of family offices in the U.S. are either looking at, or have invested in crypto.

The BTFD data was compiled from posts mentioning “buy the dip” on social media platforms such as Twitter, Reddit, Discord and Telegram by K J Lanaul and published on the Insights Santiment blog earlier this week. It tells a positive story too, in a roundabout way.

The research indicated that many traders over the past year have called for buying the dip too early on a downward trend, with the price often falling significantly further afterward and failing to recover for months at a time.

“Often the crowd unanimously call the dip/bottom earlier than the actual dip and the real bottoms forms when the crowd least expects which is represented by low to no mentions in Buy The Dip. As of now the mentions are very low.”

For example, during mid-May, last year after the price of BTC started to crash in response to China’s Bitcoin mining ban and Elon Musk-related FUD, roughly 68,000 traders online mentioned buying the dip as BTC dropped to around $44,000. The bottom however, did not materialize until late July when BTC tagged roughly $29,000.

“The pattern that we have recognized is a 3 wave of Buy the Dip mentions during the downtrend each lower than the previous one and after 3 waves the bottom occurs before the market recovers,” Lanaul wrote.

Buy the Dip social volume x BTC price: Insights Santiment

Crypto for the family

While prices fluctuate short term, long term growth in crypto seems inevitable as more high net worth individuals and families back the sector. According to the latest edition of BNY Mellon’s Global Family Office survey, 77% of family offices are either active in crypto, or are looking at investing in the sector in near future.

Family offices are private firms that manage investments on the behalf of high-net-worth individuals or families. BNY Mellon is an investment banking giant that also provides services in the family office market.

The survey polled 200 participants consisting of 144 multi-family offices and 56 single-family offices who all manage more than $150 million worth of assets each.

Out of the large cohort who were keen on or active in crypto, 72% of them reported intentions to increase crypto exposure over the next 12-24 months. Notably, the poll also found that 64% of multi-family offices were actively investing in crypto, compared to 36% of single-family offices.

In terms of crypto exposure methods, 58% of respondents stated that they preferred exchange-traded funds (ETFs), while 42% indicated a preference for direct ownership and custody.

BNY Mellon partners with Chainalysis to track users’ crypto transactions

February 24, 2022 Coin Telegraph

Banking

Bank of New York Mellon, the world’s largest custodian bank, has partnered with blockchain software firm Chainalysis to track its users’ crypto transactions.

The Bank of New York (BNY) Mellon has announced a partnership with blockchain-data platform Chainalysis to help track and analyze cryptocurrency products. BNY Mellon is the world’s largest custodian bank, currently overseeing $46.7 trillion in assets.

Chainalysis is a blockchain-data analysis platform that offers services to traditional financial institutions, allowing large firms to manage the legal risks that come with cryptocurrency more easily. As part of the partnership, BNY will utilize Chainalysis software to track, record and make use of the data surrounding crypto assets.

The risk management software offered by Chainalysis includes KYT (Know Your Transaction), Reactor, and Kryptos, with the most important being the KYT flagging system — which automatically detects whether cryptocurrency transfers are deemed "high risk."

If the KYT software sees crypto being transferred to a sanctioned wallet address it can preemptively block the transaction. Reactor provides firms with further investigative power on the blockchain while Kryptos collects and translates complex data into cogent information for institutions.

Speaking on the partnership, Caroline Butler, head of global custody, tax and network management at BNY Mellon, highlighted the importance of ensuring trust as the banks enters the world of digital assets:

“At BNY Mellon, we enter the digital asset market with the title of the most trusted asset service provider. Working with Chainalysis and other leading fintech companies, we are developing our capabilities in the growing cryptocurrency industry and reflecting this in our products.”

Despite the services that Chainalysis offer drawing criticism from more privacy-oriented crypto users, its ability to provide critical monitoring services to large firms helps legitimize the adoption of cryptocurrencies into traditional finance.

“Chainalysis has always believed that financial institutions are critical to the overall growth and success of the cryptocurrency industry,” Chainalysis co-founder Jonathan Levin said in a statement.

BNY Mellon’s push into cryptocurrency began in February last year, when it announced plans to hold, transfer and issue Bitcoin and other cryptocurrencies as an asset manager on behalf of its clients.

This follows a broader trend of traditional finance warming to the idea of cryptocurrency, with household names such as Morgan Stanley, Citibank and JPMorgan now managing and actively investing in cryptocurrency.

Warren Buffett invests $1B in Bitcoin-friendly neobank, dumps Visa and Mastercard stocks

February 15, 2022 Coin Telegraph

Warren Buffett invests B in Bitcoin-friendly neobank, dumps Visa and Mastercard stocks

Bank of America

The "Oracle of Omaha" now has more companies in his portfolio that have direct/indirect exposure to Bitcoin and similar cryptocurrencies.

Warren Buffett's Berkshire Hathaway dumped a portion of its Visa and Mastercard holdings and increased exposure in Nubank, the largest fintech bank in Brazil that's also popular among the country's Bitcoin investors.

In a securities filing late Monday, the industrials conglomerate disclosed that it had purchased $1 billion worth of Nubank Class A stock in Q4/2021. On the other hand, it sold $1.8 billion and $1.3 billion worth of Visa and Mastercard stock, respectively, signaling a shift away from credit companies to gain exposure in their fintech rivals.

Buffett, the so-called "Oracle of Omaha," is popular for his cautious approach to investing, particularly in the market's hottest sectors such as fintech. The veteran investor had also downplayed emerging decentralized finance solutions like Bitcoin (BTC), ridiculing it as an asset that "does not create anything."

But Berkshire's new stake in Nubank shows that Buffett has been softening up to fintech lately. In detail, the firm had invested $500 million in the startup in July 2021. Its returns on the said investment amounted to $150 million in Dec. 2021 after Nubank debuted on the New York Stock Exchange (NYSE).

$NU Buffett-backed Nubank stock set for NYSE debut as IPO pricing valued company at about $41.5 Billion.

The company raised $2.60 Billion as it sold 289.15 Million shares in IPO. Berkshire bought 10% of the shares in the offering.#fintechnews pic.twitter.com/HTujZZvCtJ
— InvestingDesk (@InvestingDesk) December 9, 2021

So far, Buffett has not shown any intention to sell his position in Nubank.

The Buffett-Bitcoin connection

Buffett's additional investment into Nubank shows his acknowledgment of the fintech sector's underlying theme: the digitization of financial services, as well as his willingness to associate with companies that are involved in the cryptocurrency sector.

In detail, Easynvest, a trading platform that Nubank acquired in September 2020 has been actively offering a Bitcoin exchange-traded fund (ETF) since June 2021. Dubbed QBTC11, the ETF is backed by QR Asset Management and is listed on the B3 stock exchange, the second-oldest bourse in Brazil.

Thus, it appears that Nubank, which remains exposed to the emerging crypto sector via Easynvest, could use the additional revenue opportunities to benefit its top investor, Warren Buffett, despite his views that Bitcoin is a "rat poison squared."

That is primarily because of the growth of crypto-related investment products in 2021. Notably, their numbers doubled in the year, rising from 35 to 80, as per Bloomberg Intelligence data, while the total valuations of the assets they held reached $63 billion versus $24 billion at the start of 2021.

*Cash flowing into crypto funds doubled in 2021. Source: Bloomberg Intelligence*

Emily Portney, chief financial officer at Bank of New York Mellon Corp. — another firm in Buffett's investment portfolio, noted that digital assets could become a "meaningful source of revenue" for investment banking firms in the future as Bitcoin investment vehicles become more mainstream.

Meanwhile, Leah Wald, chief executive of crypto-asset manager Valkyrie Investments, predicted an increase in the capital flows into crypto-related investment vehicles, saying they have become a "phenomenon that's starting to take off." Wald:

"If you look at inflows from a volume perspective, not only has it been steady even with the price corrections that Bitcoin is notoriously famous for, but you're seeing a lot of institutions jump in."

Buffett's portfolio full of crypto-loving companies

While Buffett might not invest in Bitcoin directly, he is already gaining indirect exposure as companies in his portfolio foray into the crypto sector.

For instance, in October 2021, just a month before Bitcoin reached its all-time high of $69,000, fifth-largest U.S. bank, U.S. Bancorp, launched a cryptocurrency custody service for its institutional investment managers, noting that they witnessed an increase in demand from their "fund services clients" over the last few years.

Similarly, in another announcement made October 2021, Bank of America launched a cryptocurrency research initiative, citing "growing institutional interest."

Months before, BNY Mellon announced that it would hold, transfer, and issue Bitcoin and similar cryptocurrencies for its asset-management clients.

Announcing the creation of the BNY Mellon Digital Assets unit - A team dedicated to building the first multi-asset custody and administration platform for traditional and digital assets, including #cryptocurrencies. https://t.co/aZ7wMfAXqg pic.twitter.com/L54TFVpJNv
— BNY Mellon (@BNYMellon) February 11, 2021

"The Nubank investment can be tagged as Buffett's way of supporting the fintech/crypto world without taking back his criticisms of the past," asserted Greg Waisman, co-founder and COO of crypto wallet service Mercuryo, adding that the Berkshire boss is now backing the "digital currency ecosystem indirectly."

"Even an indirect exposure is bound to increase the positive sentiment that may push more investors into the space."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

BNY Mellon Urges Ireland to Adopt Crypto Rules Before EU Regulations, Report Reveals

October 25, 2021 Bitcoin.com

BNY Mellon Adds to Crypto Activity with Pure Digital Bet

July 21, 2021 The Crypto Briefing

BNY Mellon joins State Street to service new crypto exchange

July 21, 2021 Coin Telegraph

Adoption

Traditional financial institutions like State Street and BNY Mellon continue to get involved in the fast evolving cryptocurrency space.

Bank of New York Mellon is joining a new cryptocurrency initiative by offering its custody support to a new crypto exchange backed by the American bank State Street.

According to a Wednesday report by the Financial Times, BNY Mellon has joined a consortium of six banks behind the launch of London-based Pure Digital, a new crypto trading platform venture that is scheduled to execute its first Bitcoin (BTC) trade in the near future.

The upcoming crypto venture came under the industry’s spotlight in April, with State Street announcing plans to provide its trading infrastructure to Pure Digital exchange through its foreign exchange technology subsidiary Currenex. The institutional-grade platform is expected to be a fully automated over-the-counter market for cryptocurrencies, featuring physical delivery and bank custody.

According to the report, BNY Mellon and State Street, alongside other unnamed banks behind Pure Digital, will create a cash cryptocurrency trading venue in a bid to compete against larger industry players. “We have spoken to all the top-tier banks but we think custody banks were some of the first to see demand, so they are now more advanced,” Pure Digital CEO Lauren Kiley said.

Pure Digital co-founder Campbell Adams reportedly noted that the firm expects to roll out trading “within a week,” with the first trade tentatively involving a Bitcoin trade. The exec also said that Pure Digital is not worried about collaborating with banking institutions, expressing confidence that the bank's contribution is important for the industry’s adoption. “The crypto market needs banks, I don’t think it can scale without them,” he stated.

The latest news marks another milestone for cryptocurrency adoption by financial institutions in the United States, with both BNY Mellon and State Street becoming increasingly engaged in the industry. After announcing crypto custody plans in February, BNY Mellon continued moving into crypto, last week becoming an exchange-traded fund service provider for major crypto asset manager Grayscale Investments.

State Street is known for its digital currency collaboration with Winklevoss’ Bitcoin exchange Gemini. Last month, the bank launched a dedicated digital finance division focusing on cryptocurrency, blockchain technology and central bank digital currencies.

Oldest US Bank BNY Mellon to Provide Grayscale Bitcoin Trust With Asset Servicing and ETF Services

July 13, 2021 Bitcoin.com

BNY Mellon to Assist Grayscale with Bitcoin ETF Plans

July 13, 2021 The Crypto Briefing

BNY Mellon to provide ETF services for Grayscale’s Bitcoin Trust

July 13, 2021 Coin Telegraph

bitcoin regulation

The new agreement further reinforces Grayscale’s commitment to converting Grayscale Bitcoin Trust into an ETF as its strategic goal.

The bank of New York Mellon, America’s oldest bank, has signed an agreement with cryptocurrency asset manager Grayscale Investments to provide a set of services to its flagship Bitcoin (BTC) investment product.

Grayscale officially announced Tuesday that it selected BNY Mellon as an asset servicing provider for Grayscale Bitcoin Trust (GBTC), a major digital currency investment product providing indirect exposure to Bitcoin.

BNY Mellon is also expected to provide transfer agency and exchange traded fund-related services for the GBTC upon its conversion to an ETF, Grayscale noted. As part of the agreement, BNY Mellon will provide GBTC with fund accounting and administration effective Oct. 1, 2021.

The agreement aims to further improve Grayscale’s GBTC in terms of scalability, resiliency and automation through BNY Mellon’s platform, including the bank’s proprietary ETF center that offers technology specifically designed to support digital asset ETFs. The new development is also an important milestone for Grayscale as it reinforces the company’s commitment to converting GBTC into an ETF as its strategic goal, Grayscale CEO Michael Sonnenshein said.

Roman Regelman, CEO of asset servicing and head of digital at BNY Mellon, noted that the bank’s relationship with Grayscale “stands squarely at the intersection of trust and innovation.”

“It’s another critical milestone in our rapidly growing digital asset capabilities and broader strategy of putting client choice at the center of everything we do,” he added.

Grayscale’s GBTC is not the only potential ETF that is expected to involve BNY Mellon’s expertise. In 2019, BNY Mellon was appointed to serve as transfer agent and administrator of Bitwise Asset Management’s proposed Bitcoin ETF.

As previously reported, the United States regulators have not yet approved a Bitcoin ETF, having delayed multiple regulatory decisions on such products in recent months. Other global jurisdictions like Canada and Brazil have already launched several Bitcoin ETF products, including ETFs by Canadian asset manager 3iQ, European firm CoinShares, and Brazilian asset manager QR Asset Management.

BNY Mellon

Crypto for the family

The Buffett-Bitcoin connection

Buffett's portfolio full of crypto-loving companies

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