During the fourth quarter 2022 earnings call on Friday, BNY Mellon CEO Robin Vince spoke about digital assets. He said that after launching its crypto escrow service last October, it continues to be a focus for the bank, more on tokenization and distributed ledger (DLT) rather than crypto. Wide adoption is not anticipated in the next two years, possibly five years. While traction is not certain to occur, BNY Mellon should have a presence just in case.

On that last point, Vince said: “It would be like being the custodian of 50 years ago and sticking with paper and not adopting a computer. That won’t be us.”

The final version of the Basel banking rules for crypto assets was published at the end of December. BNY Mellon and other banks were concerned about the requirement that cryptocurrency custodians reserve one dollar of capital for every dollar of cryptocurrency in custody. The final rules said that those capital requirements applied to the banks that held the assets, not to the custody of the digital assets.

Cryptocurrencies have much more traction than the tokenization of conventional assets like stocks, bonds, and real estate. So, to ride up the learning curve and avoid being usurped by startups, banks need to be active in the space.

Robin Vince’s Digital Asset Comments On Q4 Earnings Call

This is what the CEO of BNY Mellon had to say:

“We launched our digital asset custody platform in the US in October. And as I highlighted in my opinion piece in the Financial Times a month ago, this will continue to be a focus for us, not so much for cryptocurrencies but for the broader opportunity that exists in digital assets and distributed ledger technology. If anything, recent events in the crypto market only further highlight the need for trusted regulated providers in the digital asset space.”

“Specifically for digital assets, it’s the longest-term play of any of the things we’ve talked about. I expect it to be negligible from a revenue standpoint over the course of the next two years. It could be negligible for the next five years. But as the world’s largest custodian, we’re in the business of taking care of things. We take care of 44 trillion dollars worth of things. And if there are going to be new things to take care of, we should be in the business of taking care of them.”

“If the way we take care of things changes, which is the point about technology, we have to adapt to that. And so we are investing for a future that will probably come to be. But maybe not. But if it comes to be, we have to be there. It would be like being the custodian of 50 years ago and sticking with paper and not adopting a computer. That won’t be us.”

“So we’re investing, we’re being cautious, we’re being deliberate, and we have R&D in different parts of the company and it’s measured. But we think it’s important for us to participate in the broader digital asset space.”