The Bank of New York Mellon (BNY Mellon) reported over $13 million in Bitcoin exchange-traded funds (ETFs) at the conclusion of the fourth quarter, highlighting the growing interest of traditional financial institutions in digital assets.
A recent SEC filing revealed that BNY Mellon holds 115,108 shares of the WisdomTree Bitcoin Fund (BTCW), valued at around $11.87 million, along with 25,309 shares of BlackRock’s iShares Bitcoin Trust (IBIT), which are valued at approximately $1.4 million.
Wall Street Embracing Bitcoin
BNY Mellon’s investment in Bitcoin ETFs reflects a rising trend of major Wall Street banks slowly entering the digital asset market.
For example, JPMorgan Chase has nearly $1 million in Bitcoin ETF shares, while Goldman Sachs has reported over $2 billion in Bitcoin and Ethereum ETF holdings as of the end of the fourth quarter.
The SEC’s approval of spot Bitcoin ETFs in early 2024 allows both institutional and retail investors to gain exposure to Bitcoin without directly holding the asset. This development is seen as a significant milestone for the adoption of crypto in conventional finance.
Even with the growing ETF investments, regulatory hurdles still hinder major banks from holding or trading cryptocurrencies directly.
Goldman Sachs CEO David Solomon stated in December that regulatory challenges prevent banks from direct crypto ownership. He emphasized that while the firm offers advisory services concerning digital assets, it is prohibited from holding Bitcoin as a principal.
Shifting Regulatory Landscape
Even with existing restrictions, regulators are beginning to adjust their stance under the new US administration. Federal Reserve Chair Jerome Powell recently confirmed that the Fed will not obstruct banks from offering cryptocurrency services, as long as they manage the associated risks effectively.
During a Congressional hearing on February 12, he acknowledged that many banks regulated by the Fed are already involved in crypto operations under established guidelines but emphasized the importance of avoiding excessive exposure. However, he did not address the possibility of banks investing in and holding Bitcoin in their balance sheets.
Powell’s remarks coincide with a broader shift towards a more favorable attitude towards crypto within Washington. Recently, Congress has moved forward with bipartisan legislation aimed at creating clearer regulations for cryptocurrencies, while the SEC has shifted away from a heavily enforcement-based approach by pausing several lawsuits against notable crypto companies.
Moreover, the Treasury has shown willingness to approach stablecoin regulation, and lawmakers are continuously advocating for regulatory clarity to prevent innovation from relocating offshore.
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