The Bank of New York Mellon, recognized as the largest custodian bank in the United States, has received an exemption from a controversial SEC regulation that could facilitate Bitcoin custody.
The institutional custody landscape for Bitcoin (BTC) and cryptocurrencies in the U.S. made progress as BNY Mellon was reportedly allowed to operate outside the confines of the Staff Accounting Bulletin No. 121, commonly referred to as SAB 121.
The Securities and Exchange Commission’s SAB 121 instructed entities holding customer cryptocurrency to categorize these assets as corporate liabilities. Additionally, it mandated that financial institutions disclose the types of crypto they safeguard and their respective valuations.
Initially, lawmakers in the U.S. House of Representatives voted to eliminate the SEC’s directive, but the current administration under President Joe Biden vetoed the bill, allowing the regulation to remain in place.
With BNY Mellon obtaining an exemption from the requirements of SAB 121, it could potentially set the stage for major U.S. banks to provide custody services for customers’ Bitcoin and other cryptocurrencies. Michael Saylor, the founder of MicroStrategy and the largest corporate holder of BTC globally, stated that one or more mainstream banks might soon be authorized to handle crypto custody.
This progress could indicate a relaxation of the U.S. federal government’s stance on cryptocurrency regulation. For years, advocates within the industry have criticized U.S. authorities for their alleged “Operation Choke Point 2.0,” a multi-agency initiative aimed at excluding cryptocurrency from the traditional financial ecosystem.
The ability of BNY Mellon and other banks to custody Bitcoin may also drive up BTC’s market price. Saylor has previously indicated that bank custody of BTC represents the final of three critical factors necessary for propelling Bitcoin beyond $5 million per coin.
