In Crypto Land, a Milestone and a Lawsuit

Plus, N26 woes continue to mount.

Number of the Week: -34% (explanation below)

In Crypto Land, a Milestone and a Lawsuit

The fanfare could have been louder. This week, the oldest bank in the United States, Bank of New York Mellon, announced that it has begun holding cryptocurrency investments for some of its customers. The Wall Street Journal reported that New York state’s financial regulator has granted BNY Mellon permission to hold digital assets for its customers (although the bank does not yet appear on the Department of Financial Services’ Web site listing of entities that have been granted state “BitLicenses.”)

The development was long anticipated. Back in February 2021, BNY Mellon announced it was creating a digital assets group with the goal of doing exactly what they are now doing. Since that initial announcement, Goldman Sachs relaunched its crypto trading desk, Citi created a digital assets group, and other big banks have found way to grab a piece of crypto. But BNY Mellon is the first traditional bank to take custody of customers’ cryptocurrency (for now, only Bitcoin and ether).

In one sense, BNY Mellon is very late to the crypto party; obviously millions of consumers already entrust custody of Bitcoin and other cryptocurrencies to upstart places like Coinbase and Robinhood. Omid Malekan, an author and consultant who teaches cryptocurrency at Columbia Business School, told FIN the bank’s late 2022 entry into crypto is “a pretty damning reflection of the industry.”

And yet, a 238-year-old financial institution like BNY Mellon is a very different creature from, say, Robinhood.