Bank of New York Mellon, America’s oldest bank plans to start transacting bitcoin for its clients. This decision comes after the surge in cryptocurrency which has really become popular, so popular that other firms like Tesla (who recently invested a whopping sum of $1.5 billion in Bitcoin and promises to start accepting it as a means of payment), Mastercard, and a host of other big-tech firms have began to associate themselves with it.
America’s oldest bank has revealed that it is opening its service to cryptocurrency. It aims to open its custodial service to Bitcoin before the end of this year. The bank will therefore hold, issue and transfer Bitcoin for clients.
Experts speculate that in the next three to five years, Bitcoin would have become widespread and generally accepted by major banks. The bank’s plans to issue, hold, and transfer clients’ bitcoin marks a key development in bringing cryptocurrencies into the mainstream.
The bank plans on treating digital currency the same way it treats orthodox investments in its assets management systems. Previously, Banks including BNY Mellon had to work with other custodial firms so as to be able to manage cryptocurrency holdings. Now that the bank is incorporating cryptocurrency into its systems, there’ll be no need to engage the services of external custodial firms.
According to a post by Business Insider, ‘Bitcoin and other tokens have garnered new demand among the Wall Street establishment as institutional investors pile into the crypto market. Demand from fund managers helped bitcoin leap to record highs in early January’.
Since Tesla’s investment in Bitcoin that pushed the value of Bitcoin to $48,000- and all-time high, many public and major companies have started to invest in Bitcoin, buying it up as an alternative reserve asset.
America’s oldest bank is already working on the prototype of a platform that would allow cryptocurrency transactions to use the same transfer systems as bonds and stock. The firm says it’s aim is that this would be available before 2021 comes to an end.
With Bitcoin’s popularity on the rise, regulators are deciding to soften their stance on cryptocurrencies and their uses as alternative assets. The Securities Exchange Commission is expected to approve the first bitcoin exchange-traded fund this year, further opening the market to institutional flows.
The office of the Comptroller of the Currency in a separate statement last month, said banks could use blockchain-based currencies and stable coins – digital tokens backed by fiat currencies – for certain transactions. This suggestion doesn’t directly affect Bitcoin, all it means is that the government is continually opening its arms in embrace for digital currencies.