New York’s Mellon Corp (BNY Mellon), the oldest bank in the US, is looking into offering digital asset services through its latest blockchain-based financial tool. On Thursday, the banking giant announced a new product that allows fund managers to post real-time Net Asset Value (NAV) directly onto a blockchain, negating the need for third-party accounting firms.
BlackRock, the world’s largest asset manager, will reportedly become the first to use the tool for its tokenized money market fund, BUIDL.
BNY Mellon is among several Wall Street banks that are purportedly warming up to crypto, supported by US President Donald Trump’s pro-crypto administration, which has already cut back on restrictions imposed by the Securities and Exchange Commission (SEC) during the Biden era.
BNY Mellon’s push into tokenization
Tokenized funds are investment vehicles that resemble traditional mutual funds but operate on a blockchain ledger. By reducing reliance on intermediaries, these funds offer what blockchain technology represents: transparency, efficiency, and cost savings.
Speaking in a press briefing earlier today, Caroline Butler, BNY Mellon’s head of digital assets, discussed the bank’s position in offering blockchain-native financial services.
“Because we have expertise in blockchain, other fund accountants in the industry would struggle to do this,” she explained. Butler believes real-time NAV reporting on a blockchain will improve transparency and credit ratings for tokenized funds.
According to Butler, BNY Mellon’s previous ventures into digital assets mainly focused on crypto custody, but this NAV tool will extend the institution’s services beyond safekeeping to integrate blockchain into mainstream finance.
Regulatory tailwinds shifted into BNY’s crypto ambitions
In 2022, BNY Mellon launched a digital asset custody platform that allowed clients to store Bitcoin and Ethereum. However, in March of that year, during the Biden administration, the SEC introduced a regulatory balance sheet of requirements, forcing financial institutions holding crypto to account for it as a liability.
The guidance, known as Staff Accounting Bulletin 121, stifled banks’ ability to engage with digital assets.
BNY Mellon secured an exemption from the financial regulator in September last year to provide custody services for Bitcoin and Ethereum for exchange-traded products (ETPs) without regulatory roadblocks.
After Donald Trump re-entered the Oval Office on January 20, the SEC, now under a new chair, quickly rescinded SAB 121, opening the door for banks like BNY Mellon to expand their crypto services without punitive accounting treatment.
BNY Mellon set to announce Q1 2025 earnings
BNY Mellon is set to release its Q1 2025 earnings before the market opens on April 11. Analysts project adjusted earnings per share (EPS) of $1.50, a 16.3% increase from the previous year. The bank has consistently outperformed Wall Street expectations in recent quarters, driven by a $2 trillion in assets under management (AUM) and strong fee revenue.
The company’s stock has surged 38.85% over the past year, far outpacing the S&P 500’s 4% gain and the Financial Select Sector SPDR Fund’s (XLF) 14.69% return.
In Q4 2024, the bank’s earnings beat estimates, with adjusted EPS rising 33.3% year-over-year to $1.72. Total revenue increased 11.2% to $4.8 billion, fueled by a 9% jump in fee revenue and an 8.1% rise in net interest income. Cost-cutting measures also added to the profits, with non-interest expenses dropping by 16%.
Towards the end of February, according to a Wall Street Journal report, BNY Mellon announced a strategic multiyear partnership with artificial intelligence (AI) leader OpenAI. The collaboration will provide BNY Mellon with access to OpenAI’s AI tools, including its Deep Research platform and advanced reasoning models, improving the capabilities of the bank’s internal AI platform, Eliza.
“We feel AI has transformational power and will be part of every product and service,” Sarthak Pattanaik, head of BNY Mellon’s AI hub, reckoned.
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