Speaking at a conference this week, the head of digital asset banking at BNY Mellon, Michael Demissie, says cryptocurrency is “here to stay” based on investor interest. The US banking giant entered the digital asset industry in October, launching a new crypto custody platform.
Demissie spoke at an Afore Consulting conference, discussing the digital asset industry and the interest garnered from institutional investors. The BNY Mellon head backed up his statement with a survey conducted by the bank in October. The survey stated 91% of custodian bank clients are interested in blockchain-based tokenised products.
The benefits of tokenisation, as noted by survey respondents, include the removal of friction from the transfer of value (cited by 84%) and increased access for mass affluent and retail investors (cited by 86%). Despite the interest, 60% of respondents agreed that the large technological lift needed improvement. Demissie underscored the need for further industry regulation to inspire responsible actors to provide reliable services that would bolster investor confidence.
“While crypto natives are looking forward to the day when all of capital markets infrastructure exists on an interoperable blockchain, the traditional Institutional Investor community has to date been less sure,” BNY Mellon wrote in its report. “This study shows that minds are changing, with traditional investors ready to imagine a world where up to one-third of their portfolios will contain digital assets.”
According to the Bank of New York Mellon, it will start accepting cryptocurrency from customers on Tuesday. As a result, BNY Mellon will be the first significant US bank to offer regular banking services and complementary digital asset protection.
Earlier this year, the New York banking regulator gave the bank its clearance. This week, the bank can start taking Bitcoin and Ethereum. The digital asset key will be stored by BNY Mellon, which will also offer bookkeeping services like those offered for stocks and commodities. The move marks a crucial turning point in traditional banks’ acceptance of digital assets as a real market and a new income source.
While calling cryptocurrencies the bank’s “longest-term play”, Vince acknowledged that ignoring digital assets “would be like being the custodian of 50 years ago and sticking with paper and not adopting a computer” but also added that any investments made in the sector are made both carefully and deliberately.
He also addressed some unfortunate events that shook the crypto world last year, including the unprecedented collapse of FTX, once the third-largest crypto exchange in the world, that filed for bankruptcy in November last year, saying that these only highlight “the need for trusted regulated providers in the digital asset space.”
BNY Mellon is an American investment banking services holding company headquartered in New York City and has been historically friendly toward digital assets. In 2022, the bank received authorisation from New York’s banking regulators to accept Bitcoin and Ether deposits from chosen customers.
