BNY Mellon made headlines when it announced plans to support Bitcoin custody and transactions. The bank expects its history and trustworthiness in financial markets to give Bitcoin significantly more credibility among potential investors. Technology companies Apple, Twitter, and Uber have all begun exploring ways that Bitcoin may fit into their business operations. Bitcoin regulations continue evolving around the globe, with North America opening its doors to the currency while other nations attempt to restrict it. Bitcoin reached a new all-time high of $49,536.23 on Valentine's Day.
- BNY Mellon announced plans to support Bitcoin and other digital currencies. The nation’s oldest bank will add Bitcoin to its existing financial network, and will treat the asset in a similar way to stocks and debt instruments. The bank will hold and transfer Bitcoin for its clients, and hopes to provide a single platform to manage diverse client portfolios. CEO Todd Gibbons cited “a surge in interest and demand from clients” and the desire “to be a first-mover in bridging the gap between traditional and digital assets” as motivating factors for the decision. BNY Mellon expects to custody a significant amount of Bitcoin for clients in the near future.
- Many of the largest technology companies in the country have indicated near-term interest in Bitcoin. Apple has made it possible to spend Bitcoin with Apple Pay, although only in very specific circumstances. This move has led to speculation that a more complete Bitcoin integration with Apple Pay is on the near horizon. There has also been speculation that Apple may use Bitcoin to protect its massive cash assets from extreme impacts of dollar inflation, but this information has not been confirmed by a company insider. Twitter CFO Ned Segal stated that the company has considered how it would “pay employees should they ask to be paid in Bitcoin” and if Twitter would “need to have Bitcoin on the balance sheet.” Twitter CEO Jack Dorsey is a longtime Bitcoin advocate who is already involved with the currency through Square and Cash App. Uber has also indicated that it may begin accepting Bitcoin payments from riders.
- SEC commissioner Hester Pierce stated that US markets are ready for a Bitcoin exchange-traded product. Hester is likely to work with SEC chairman nominee Gary Gensler on such an offering. Canada was one step ahead, having already approved a Bitcoin ETF on Thursday. Meanwhile, Nigeria’s government is taking steps to ban Bitcoin because demand for the cryptocurrency is starting to outpace that of Nigeria’s government-issued currency. The Naira’s history of inflation and instability has resulted in many preferring to deal in Bitcoin. A Nigerian senator noted that “Bitcoin has made [Nigeria’s] currency almost useless or valueless.”
- Based on Powell’s comments at the Economics Club of New York, the United States can expect loose monetary policy for the foreseeable future. The “accommodative monetary policy” is likely to include interest rates around 0% and inflation levels above the typical 2% that had been the norm prior to COVID-19. These comments come just after the US posted a record-breaking $736 billion budget deficit through the first four months of the 2021 fiscal year.
BNY Mellon’s full scale integration plans with Bitcoin are a significant stamp of approval from one of the most trusted banks in the world. This decision will make it much easier for many large banks to include Bitcoin services in their product offering. Notable technology companies with large balance sheets are also poised to contribute to near-term institutional Bitcoin demand. Both Canada and the US are pushing legislation to make Bitcoin accessible. However, Nigeria is taking steps to eliminate Bitcoin from its economy because it is becoming more popular than the local fiat currency.