BNY Mellon Adds to Crypto Activity with Pure Digital Bet

Key Takeaways

  • BNY Mellon is investing in crypto trading platform Pure Digital, along with five other banks.
  • Pure Digital is aiming to compete with Coinbase and FTX for institutional clients.
  • The move suggests BNY Mellon is seeing more institutional demand for cryptocurrencies.

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America’s oldest bank furthers its involvement with cryptocurrencies. 

BNY Mellon Backs Pure Digital 

The Bank of New York Mellon has joined five other banks in backing the institutional Bitcoin trading platform Pure Digital. 

The 237-year-old institution announced its plans to add the institutional Bitcoin exchange Pure Digital to its list of crypto-based ventures Wednesday. BNY Mellon will join five other banks who are already backing the platform, including fellow custody bank State Street. 

As reported by the Financial Times, BNY Mellon will provide public backing for Pure Digital. It also intends to trade on the platform. The report outlines how BNY Mellon, State Street, and the other unnamed backers aim to create a cash cryptocurrency trading venue to compete against larger industry players such as FTX and Coinbase. It’s set to become the first cryptocurrency trading platform led by banks. According to Pure Digital co-founder Campbell Adams, the first Bitcoin trade is scheduled to take place on the new exchange within a week. 

Commenting on the Pure Digital partnership, Jason Vitale, global head of foreign exchange at BNY Mellon, said:

“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.” 

BNY Mellon first started offering crypto custody services to its clients back in February, citing an increase in institutional interest. Since then, the bank has announced it will provide custody and management services for several high-profile clients, including Grayscale Investment’s illustrious Bitcoin trust. 

Pure Digital CEO Lauren Kiley also commented on custody banks and crypto adoption. She stated that while Pure Digital had spoken to many top-tier banks, custody banks were more advanced as they were the first to see demand for crypto-related services. 

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In addition to providing crypto custody services for institutional clients, BNY Mellon has also actively invested in major players in the crypto industry. In March, the bank helped finance the crypto management firm Fireblocks with a $133 million investment. 

As BNY Mellon increases its presence in the crypto industry through ventures like Pure Digital, the bank seems set on attracting institutional interest from traditional financial markets. While crypto markets have retreated from their highs earlier this year, institutional involvement with cryptocurrencies is showing no signs of slowing.

Disclaimer: At the time of writing, the author of this feature owned BTC and ETH.

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American Banking Giant State Street set to Explore Crypto Trading Services

U.S second-oldest bank State Steet is set to provide infrastructure for a crypto trading platform for banks. This has led to speculations that the bank could foray into crypto trading in the coming months. 

State Street Providing Infrastructure for Crypto Trading Platform

It was revealed on April 8 that Currenex trading technology, a subsidiary of State Street, was working with London firm Pure Digital to create an institutional-based digital currency trading platform. The trading platform is part of the partnership between the two firms to explore the digital currency space. The trading platform expected to launch later in the year will offer institutions a regulated environment to trade cryptocurrencies. 

Unlike a traditional crypto exchange, the trading platform is expected to be an over-the-counter exchange for banks. This is in line with the plan to integrate a forex exchange infrastructure into the crypto space using Forex industry-standard APIs and systems. The trading platform will offer bilateral credit lines, and banks will know who they are transacting. 

It is understood that several banks could utilize the platform for trading purposes, including State Street bank. A statement from a spokesperson for the U.S bank revealed that the bank was currently evaluating the trading platform’s use. 

David News, head of Execution Services for State Street Global Markets, spoke on the development. “Currenex is thrilled to leverage our experience and expertise in the FX and digital asset trading marketplace to provide Pure Digital with robust technology and infrastructure for this exciting digital currency trading initiative,” he said. 

Institutions Slowly Moving to Cryptocurrency

Institutions in the financial sector are slowly but surely moving towards cryptocurrencies. The current bullish run appears to be driven by institutional adoption, unlike that of 2017 that retail investors drove. 

Financial giants like BNY Mellon, Morgan Stanley, and Goldman Sachs have all made significant moves in recent months. Payment processing platforms are not left behind, with PayPal, Mastercard, and Visa offering different crypto services. 

This is great news for the cryptocurrency space that was largely seen as a hub for criminals and shady financial activities. State Street offering cryptocurrency services will be a major plus for the cryptocurrency sector. It remains to be seen if the bank will venture into cryptocurrencies in the coming weeks.

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America’s 2nd Oldest Bank Building Bitcoin Trading Platform

Key Takeaways

  • State Street’s Currenex will help Pure Digital build a cryptocurrency trading platform. It’s due to launch in 2021.
  • State Street has plans to “explore” crypto space and may begin trading on the platform.
  • The bank joins BNY Mellon, Morgan Stanley and others in making a move towards adopting crypto.

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The United States’ second-oldest bank, State Street, is just the latest to join the crypto boom. 

State Street Makes Crypto Play 

The company’s trading technology provider, Currenex, will be providing infrastructure for a new crypto trading platform called Pure Digital. 

According to the press release, Pure Digital “will be a fully automated, high throughput OTC market for digital assets and cryptocurrencies with physical delivery and bank custody.” It’s set to launch in mid-2021. 

David Newns, Global Head of Execution Services for GlobalLink, State Street Global Markets, said of the update: 

“Currenex is thrilled to leverage our experience and expertise in the FX and digital asset trading marketplace to provide Pure Digital with robust technology and infrastructure for this exciting digital currency trading initiative.” 

Pure Digital will be multi-custodial, and there’ll be a “smart custody routing mechanism” for those who opt to trust the platform with their crypto. 

Many crypto services such as Coinbase target institutional investors with custody solutions. The custodial and Over-the-Counter offering suggests that Pure Digital will primarily focus on the institutional market rather than retail. 

“Institutional participants will trade on the platform utilizing bilateral credit enabling efficient capital utilization and control for all trading participants,” the statement from State Street said. 

Institutional Shake-Up

Institutions will be able to use bilateral credit, something Bitcoin veteran Caitlin Long raised concerns about. “BEWARE: FRACTIONAL RESERVE BITCOIN IOUs coming,” she wrote on Twitter today. “Won’t end well for the banks.” Bilateral credit involves two organizations, usually banks, extending their credit limit with one another over a set time period. This allows one bank to borrow more than the credit limit since the second bank still has a debt to pay them.

The announcement also suggests that State Street is taking a long-term view on the crypto space. Campbell Adams, the founder of Pure Digital, said that the two companies “share the same vision for the future of the digital currency market.” The release notes suggest that they have plans to “further explore” the space. 

It’s not yet clear to what degree State Street will be involved in the platform, but the focus on institutions suggests that it could commence trading and custodial services. 

State Street wouldn’t be the first major institution to adopt crypto. BNY Mellon announced it would be launching a crypto custody service in February, while the 169-year-old insurance firm MassMutual made a $100 million Bitcoin purchase towards the end of last year.

Most recently, Morgan Stanley and Goldman Sachs have shared their plans to offer Bitcoin to wealthy clients. 

State Street manages over $3 trillion in assets. 

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