(ATF) BNY Mellon has joined Tesla and MasterCard in boarding the bitcoin bandwagon on February 11, giving the volatile cryptocurrency a mainstream Wall Street boost.
The oldest continuously operating US bank said it would form a new digital assets unit to transfer, safeguard and issue digital assets in response to client demand and the move comes as bitcoin values continue to climb to new heights after receiving a legitimacy boost from the electric carmaker and the credit card giant.
BNY Mellon, founded by Alexander Hamilton, the first US Treasury secretary, in 1784, described the move as a response to market demand. “BNY Mellon is proud to be the first global bank to announce plans to provide an integrated service for digital assets,” Roman Regelman, chief executive of asset servicing, said in a statement.
“Growing client demand for digital assets, maturity of advanced solutions, and improving regulatory clarity present a tremendous opportunity for us to extend our current service offerings to this emerging field,” he added.
SETTING RECORDS
Prices of bitcoin climbed further in US trading on Thursday, rising to $48,364, a new all-time high. The cryptocurrency was trading at $48,071 at 9am Hong Kong time, according to Coindesk data, up more than 8.5% in the previous 24 hours.
“Bitcoin hit a fresh record high after announcements from both MasterCard and BNY Mellon confirmed the fundamental shift that financial institutions are committing to cryptocurrencies,” Edward Moya, strategist at currency brokerage Oanda in New York, said.
“The news has been mostly positive for the cryptoverse and steady demand with a tight supply should support higher prices,” he said. “Improved mainstream acceptance for cryptocurrencies are completely easing most regulatory concerns.”
Electric automaker Tesla, which is led by bitcoin enthusiast Elon Musk, on February 8 announced a $1.5 billion investment in the digital money and plans to accept the cryptocurrency from customers purchasing vehicles.
MORE ACCEPTANCE
MasterCard followed suit on February 10 announcing plans to start accepting “select cryptocurrencies” directly on its network for the first time. The credit card issuer said it already ventures with cryptocurrency outfits for consumers, but those funds are converted back to traditional currencies before entering the credit card network.
“Our change to supporting digital assets directly will allow many more merchants to accept crypto,” Raj Dhamodharan, MasterCard’s executive vice president for digital assets, said in a statement.
Despite the surge in bitcoin, skeptics note the currency remains highly volatile.
“Bitcoin is on a tear and it could get very interesting to see how momentum traders react to a break of the $50,000 level,” said Moya. “The $50,000 level was the ultimate target for many, so it will be interesting to see how much profit-taking occurs.”
During her Senate confirmation hearing, newly-installed Treasury Secretary Janet Yellen said cryptocurrencies are vulnerable to illicit finance. But analysts are upbeat despite the official scepticism.
Christopher Wood, global head of equity strategy at Jefferies, said he remains “extremely bullish” on bitcoin and advised those who are not invested to take advantage of any pullbacks. “Remember that institutional ownership of Bitcoin has only just begun,” he warned.
With reporting by Agence France-Presse
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