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BNY Mellon (BK) Enters Digital Currency Market, To Form New Unit

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Taking a step forward in providing an integrated service for digital assets, The Bank of New York Mellon Corporation BK has become the first global custody bank to announce plans of holding, transferring and issuing bitcoin and other cryptocurrencies on behalf of its institutional clients.

For this, the bank is developing an enterprise Digital Assets unit, which is now in prototype. The team overseeing digital currencies will be led by Mike Demissie, the head of Advanced Solutions at BNY Mellon.

The bank is eventually planning to allow the digital currencies pass through the same financial network that it currently uses for its more traditional holdings like bonds and equities.

Pending product analysis and approvals, BNY Mellon is expected to start offering the services later this year.

Roman Regelman, the CEO of Asset Servicing and Head of Digital at BNY Mellon stated, “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."

Demissie said, “The Digital Assets unit plans to deliver a secure infrastructure for transferring, safekeeping and issuing digital assets. Consistent with our open-architecture approach, the unit will leverage BNY Mellon's digital expertise and leading technologies from fintechs and other collaborators to speed up product development and help our clients tap into the best available solutions in the market.”

Notably, in the past, custody banks hesitated to enter the cryptocurrency market because of the potential regulatory or legal risks involved.

However, with the rising prices of bitcoin recently, cryptocurrencies have become more popular with asset managers, hedge funds and institutional investors.

Digital currencies have become even more popular of late after Tesla CEO, Elon Musk, expressed his interest in the same. Earlier this month, Tesla revealed that it purchased $1.5 billion worth of bitcoin for “more flexibility to further diversify and maximize returns on our cash.”

Notably, BNY Mellon’s global diversification efforts, robust asset balances and prudent expense-management initiatives are expected to continue to aid financials in the quarters ahead.

Over the past six months, shares of the company have gained 13% compared with 30.5% growth recorded by the industry.

Currently, BNY Mellon carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the finance space are mentioned below.

Interactive Brokers Group, Inc.’s IBKR earnings estimates for 2021 have been revised 22.4% upward over the past 30 days. Its shares have gained 33.3% in the past three months. Currently, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings estimates for LPL Financial Holdings Inc. (LPLA - Free Report) have increased 8.2% for the current year over the past 30 days. The Zacks Rank #2 (Buy) stock has gained 43.7% in the past three months.

Morgan Stanley’s MS earnings estimates for 2021 have been revised 6.4% upward over the past 30 days. Its shares have gained 30.2% in the past three months. Currently, the company carries a Zacks Rank #2.

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