BNY Mellon SAB 121 exemption may herald bank Bitcoin custody

Bank of New York Mellon, the largest custodian in the United States, has won an exemption from a controversial SEC rule that could enable its Bitcoin custody service.

Institutional custody of Bitcoin (BTC) and cryptocurrencies in the United States has taken a step forward with the announcement that BNY Mellon has reportedly received permission to operate outside of Staff Accounting Bulletin No. 121, also known as SAB 121.

The Securities and Exchange Commission’s SAB 121 recommended that entities holding client crypto should report those assets as corporate liabilities. SAB 121 also required financial services providers to disclose the type of crypto being hedged and the valuation that accompanies it.

Lawmakers in the U.S. House of Representatives initially repealed the SEC’s policy, but the White House under current President Joe Biden vetoed the bill, signing it into law.

BNY Mellon’s exemption from SAB 121 requirements could pave the way for major U.S. banks to store their clients’ bitcoin and cryptocurrencies. Michael Saylor, founder of MicroStrategy, the world’s largest institutional BTC holder, said one or more mainstream banks could soon get the green light to store crypto.

Such a development could signal a softening of the U.S. federal crackdown on crypto. Industry advocates have criticized U.S. authorities for years over their so-called “Operation Tipping Point 2.0,” a multi-regulatory agenda to drive crypto out of the traditional financial system.

The custody of Bitcoin by BNY Mellon and other banks could also accelerate the spot price of BTC. Saylor has previously suggested that bank custody of BTC is the last of three catalysts needed to push Bitcoin above $5 million per coin.

MICHAEL SAYLOR: Three catalysts will be needed #Bitcoin Up to $5 million:

🟢 – Spot ETF approval

🟢 – Fair value accounting rules from FASB

🟠 – Banks offer storage and lending services in exchange for Bitcoin as collateral – coming soon pic.twitter.com/9uL7fDw0Hr

— Bitcoin Archive (@BTC_Archive) September 20, 2024