America's oldest bank, BNY Mellon, is drawing closer to offering custodial services to exchange-traded fund clients, according to Bloomberg.

The progress towards being in a position to offer the services comes "after a review enabled the company to avoid treating the assets as a balance-sheet liability," said the report.

"The review, conducted earlier this year by the Office of the Chief Accountant at the Securities and Exchange Commission, didn’t object to BNY’s determination that the safeguarding of cryptoassets for its regulated exchange-traded product clients shouldn’t be recognized on BNY’s balance sheet," the bank told Bloomberg, according to the report.

It appears that the SEC has granted BNY Mellon an exemption from SAB 121, which is helping to clear the way for the bank to offer custodial services for crypto ETF clients, the report also said.

BNY Mellon entering the crypto ETF custody market could eventually threaten cryptocurrency exchange Coinbase's dominance. Coinbase provides custodial services to the vast majority of U.S. spot bitcoin ETFs, including the largest one issued by BlackRock.

In Bloomberg's report, it said that "by one estimate, the crypto custody market is worth approximately $300 million now and is growing by about 30% yearly." Companies who provide custody services for crypto can charge significantly higher fees than charged for traditional assets given digital assets' security related risks, said Bloomberg.

BNY Mellon has publicly expressed interest in being involved in digital assets since at least January 2023, when CEO Robin Vince said on an earnings call that digital assets are the bank's "longest-term play." The bank supports 80% of SEC-approved bitcoin and ether exchange-traded products through its fund services business, according to Bloomberg.

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