Here's How BNY Mellon is Embracing the Investment Potential of Digital Assets

Ever since the cryptocurrency Bitcoin was thrust onto the scene back in 2008 by the enigmatic person or group known only as Satoshi Nakamoto, digital assets have been a hot topic in the investment space.

Since then, numerous other cryptocurrencies such as Ethereum and Doge have also been created and caused investment storms, not to mention the more recent introduction and proliferation of non-fungible tokens (NFTs). Perhaps the most well publicized example of an NFT was back in March when Twitter founder and CEO, Jack Dorsey sold the digital ownership rights to his first ever tweet for a staggering $2.9 million.

In short, a digital asset is any piece of digital data which comes with a right to use. Right to use is the key component as, without this important feature, ownership cannot be established or proven and, therefore the asset cannot be bought or sold.

BNY Mellon

The world of mainstream investment has been a little slow to wake up to the potential of digital assets and for a long time they were seen as a flash in the pan trend which would draw to an inevitable close once it lost its momentum.

However, with high profile stories such as the Jack Dorsey one described above and the proliferation of blockchain - the technology which makes cryptocurrency possible - into other industries beyond finance is starting to make Wall Street pay attention. And, as one of the biggest players in the investment game, BNY Mellon is also coming around and taking digital assets seriously as an investment opportunity.

To meet this opportunity head on, earlier this year BNY Mellon established a brand-new enterprise digital assets unit dedicated to investigating and developing solutions and capabilities which will assist its clients in making the most of digital asset investment. This will begin with the development of a client-facing prototype platform which will serve as a multi-asset digital custody and administration platform for traditional and digital assets - an industry first.

"BNY Mellon is proud to be the first global bank to announce plans to provide an integrated service for digital assets," said CEO of Asset Servicing and Head of Digital at BNY Mellon, Roman Regelman. "Growing client demand for digital assets, maturity of advanced solutions, and improving regulatory clarity present a tremendous opportunity for us to extend our current service offerings to this emerging field."

A secure infrastructure for the transferring, safekeeping, and issuing of digital assets is a critical step in establishing a viable ecosystem for these types of investments. Mastering the technology which backs up digital assets - such as blockchain - will also allow BNY Assets to further develop innovative solutions in this field.

"Enabling the use of digital assets is critical to transforming the future of custody," said Head of Custody at BNY Mellon, Caroline Butler. "Building the bridge between the traditional and digital spaces will create a front-to-back ecosystem for innovation. Our digital asset capabilities should help evolve the way the financial industry operates, including custody, collateral management, issuance, investment management, and other segments where BNY Mellon is a key service provider."

Pure Digital

BNY Mellon has further demonstrated its commitment to digital asset investment by joining a consortium of six other major investment brands and announcing its support for publicly backed cryptocurrency investment platform, Pure Digital.

This makes Pure Digital the world's first cryptocurrency trading venue which is operating with the backing of mainstream banks - something which would have been thought antithetical to the very concept of Bitcoin when it was launched back in 2008 - and it will be interesting to see how cryptocurrency trading platforms such as Coinbase and FTX which don't have a background in traditional financial markets are going to react to the news.

"BNY Mellon is pleased to be working with Pure Digital and other consortium members to explore new digital asset servicing solutions for our clients as the regulatory landscape develops," said Global Head of Foreign Exchange at BNY Mellon, Jason Vitale. "Digital assets are only going to become more embedded in global markets in the years ahead and this collaboration accords with BNY Mellon's wider strategy to develop a digital asset capability for clients across the entire trade life cycle."

Pure Digital and BNY Mellon seem like a match made in Heaven and it's going to be interesting and exciting to see the kinds of innovative technological solutions which are sure to emerge from this partnership. The two brands are hard at work developing their trading platform and, while there is currently no official release date, we're all keeping our fingers crossed it won't be too long.

Final Thoughts

However you personally feel about them, digital assets are continuing to rise in popularity. It's going to be fascinating to see how this plays out as the financial industry starts its first foray into a space which was traditional intended not to need it.

You can head BNY Mellon's Global Head of Digital Partnerships, Noam Tasch speak at Future Digital Finance 2022, being held in March, at the Hyatt Regency Miami, FL.

Download the agenda today for more information and insights.