On Monday, Tesla disclosed that it put $1.5 billion of it’s cash in Bitcoin. Today, the WSJ reports that the venerable Bank of New York, one of the largest custody banks in the U.S., is jumping into cryptocurrencies. The Bank of New York will hold, transfer, and issue cryptocurrencies on behalf of its clients.
The world’s global central banks seem awful complacent about the threat of Bitcoin to disrupt fiat money.
It doesn’t take much to imagine a scenario where employers and employees start to prefer some sort of hard money alternative (Bitcoin supply will eventually be fixed) to fiat money that global central banks can print at will. If that happens, the U.S. will have a problem it may no longer be able to solve. Trillion dollar budget deficits and outstanding debt would be a problem that would crush the economy.
We of course don’t expect that to happen. Powell & Co., will eventually wakeup to the risk here, but as the Bitcoin market gets larger and larger that is going to be more difficult to do.
Below are the details on the BKNY announcement from the WSJ.
BNY Mellon isn’t the first big-name financial firm to declare its interest in digital assets. Fidelity Investments announced plans in October 2018 to store and trade bitcoin and ether, another digital currency, and a year later won regulatory approval to operate its crypto business in New York.
But BNY Mellon’s announcement marks the first time one of the big custody banks has unveiled a road map for treating digital currencies as any other asset. And the bank hasn’t put limits on the kinds of digital assets it will allow clients to store there.
BNY Mellon intends to begin offering these capabilities later this year.
The bank expects many clients to bring their digital assets to BNY Mellon, even if custody banks currently don’t have a clear window into how large those holdings have become.