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Bitwise Recruits BNY Mellon as Transfer Agent for Proposed Bitcoin ETF

Bitwise has recruited the services of Bank of New York Mellon to act as the administrator and transfer agent for its proposed Bitcoin (BTC) exchange-traded fund (ETF).

On Wednesday, Bitwise amended its Bitcoin ETF S-1 form listing BNY Mellon as the administrator, transfer agent and ETF custodian. The amendment also listed Foreside Fund services as the marketing agent and Cohen & Co. as an auditor.

The above firms, however, must wait on the decision of U.S. financial regulators before they can assume their appointed roles. Bitwise has a short of history of delays and setbacks when dealing with the regulators but a final decision is expected by October 23 of this year.

Recently partnering with Bakkt to work on BTC futures, BNY Mellon has remained very active in the cryptocurrency space. Since 2015 it has worked on the development and integration of blockchain technology and currently holds over $33 trillion in assets.

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BNY Mellon Joins the Marco Polo Network to Develop a More Open and Connected Trade Finance Network

The Marco Polo Network announced a new strategic partnership with the Bank of New York Mellon (BNY Mellon) to create a vast financial atmosphere that will ensure economic as well as trade growth, making BNY Mellon a member of the top network of financial institutions which leverages blockchain technology for trade finance. Some of these financial institutions include; Bank of America, National Bank of Fujairah PJSC, Anglo-Gulf Trade Bank, National Australia Bank, Standard Chartered Bank, Anglo-Gulf Trade Bank, etc.

Marco Polo Network, as a consortium of TradeIX and R3, the blockchain technology firms, financial institutions, and their corporate clients, and service providers work to make international trade more efficient.

Joon Kim, Global Head of Trade Finance at BNY Mellon, said: “Collaborating with Marco Polo members is one more measure of our commitment to provide innovative opportunities to improve the client experience throughout the transaction lifecycle.”

Kim noted that the company recognized the need to tap the potentials of blockchain technology for rendering efficient and secure trade finance services.

“We recognize the tremendous potential to harness digital, data, and advanced technology capabilities to transform essential trade finance processes to make them more efficient and secure. To achieve our goals, we seek to work with forward-looking organizations, like the Marco Polo Network, that are harnessing digital to truly transform industries,” he added.

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Leaked FinCEN Files: $137M Linked to Crypto Ponzi Scam OneCoin Laundered Through Bank of New York Mellon

A leaked trove of US official documents revealed that five major banks – Deutsche Bank, HSBC, JP Morgan, Bank of New York Mellon, and Standard Chartered Bank – were involved in illicit transactions pertaining to mobsters, crypto Ponzi schemes, and money laundering.

The official Financial Crimes Enforcement Network (FinCEN) document was leaked and disclosed that more than two trillion USD had been laundered and flagged as suspicious by financial institutions following the Anti-Money Laundering (AML) act. However, the dirty money was still reported to have been freely flowing through renowned US banking institutions.

BNY Mellon wired millions linked to OneCoin

Among them, one of America’s oldest banks, the Bank of New York Mellon (BNY Mellon) was reported to have wired funds linked to the infamous crypto laundering Ponzi scheme OneCoin.

The banking institution flagged a series of transactions from their branch to FinCEN, as the transactions were deemed suspicious and layered. Layering refers to a money laundering ruse through which the source of funds is concealed through multiple transactions. It is often used by mobsters and criminals to remain undetected by the Financial Crimes Enforcement Network and other financial regulators.

$137 million in transactions wired through BNY Mellon

The funds pinpointed by BNY Mellon were linked to OneCoin, a crypto scam that made the headlines and was classified as a Ponzi scheme generating multimillion funds by US law enforcement agents. The crypto Ponzi scheme was masterminded by Ruja Ignatova, who disappeared to flee arrest.

OneCoin was operational in many countries, such as New Zealand and the US, to name a few, and generated at least $4 billion through cryptocurrency “pyramid schemes,” making it one of the most successful and biggest Ponzi scheme in cryptocurrency history.

According to the leaked report, a combined $137 million was wired thanks to numerous transactions operating through the Bank of New York Mellon. The source of the transactions was reported by the bank to originate from OneCoin perpetrators and agents.

Other banks that were named in the leaked FinCen files include Deutsche Bank, JP Morgan, Standard Chartered Bank, and HSBC.

Deutsche Bank

The Deutsche Bank is alleged to have played a role in moving money worth more than $560 million for a Latin American construction company. It is alleged by US prosecutors to have been subject to foreign bribery. FinCEN has recorded a combined total of $1.3 trillion of suspicious transactions flowing through Deutsche Bank, making it the lead bank of the pack for having the largest suspicious transaction volume.

JP Morgan

JP Morgan was said to have processed at least $514 billion of suspicious transactions. It was said to have been involved in a money-laundering operation involving former Trump campaign manager Paul Manafort, and Bernie Madoff. It is also alleged to have conducted business with a financial Malaysian fugitive and a Venezuelan criminal.

Standard Chartered Bank and HSBC

Standard Chartered Bank was said to have processed illicit transactions amounting to a combined $24 million for foreign mobsters.

Finally, HSBC is alleged to have been in cahoots with Russian mobsters, moving funds amounting to at least $4.5 billion in suspicious transactions. The bank is alleged to have continued its money laundering transactions and to have wired funds linked to a Ponzi Scheme. An HSBC Hong Kong executive has been accused of processing more than $900 million in transactions linked to criminal networks.

Statements from Deutsche Bank and other financial banks have said that the incidents that have come to light in the documents have already been investigated and resolved with Deutsche Bank’s complete cooperation.

BNY Mellon's Subsidiary Insight Investment Doubts about Bitcoin as Payment Medium

Despite the Bank of New York Mellon (BNY Mellon) becoming the first global bank that allows customers to hold, transfer, and issue digital currencies, Insight Investment, a subsidiary of BNY Mellon, reveals its sceptical attitude towards Bitcoin as the means of payment.

Insight Investment stated that Bitcoin might not suit most institutional investors due to its high volatility, low liquidity, governance challenges, and ESG risks, according to a Bloomberg report on June 30.

At the same time, facing uncontrollable resistance and high volatility during regulatory risk review, Bitcoin is more difficult to evaluate than gold, and it is impossible to comprehensively consider various factors to determine whether it can well-hedge inflation risks.

The head of currency solutions of insight Francesca Fornasari, stated in an interview:

“Slow and expensive transactions may also hinder widespread adoption.”

The parent company of Bank of New York Mellon has stepped into the cryptocurrency industry since February, but the subsidiary called for caution in investing in assets such as Bitcoin.

Fornasari said that:

“We’re skeptical in terms of the ability of Bitcoin to take over as means of payment. At the end of the day, you should be aware of the fact that if you’re investing in Bitcoin, there’s a whole number of different factors and considerations that are going to affect the value of your investment, that has nothing to do with inflation or inflation hedges.”

Since the Bitcoin bear market occurred in 2018, Bitcoin has demonstrated the weakest quarter performance. Bitcoin reached an all-time high (ATH) of $64,854 on April 14 this year, and it has now fallen by half its price.

Bitcoin, the world’s largest cryptocurrency with a market cap of $659,031,377,940, was trading at $35,118.37 during the intraday, according to Coinmarketcap.

Circle Taps BNY Mellon to Serve as Custodian for USDC Stablecoin Reserves

The Bank of New York Mellon Corporation, popularly known as BNY Mellon, has been selected to serve as the “primary custodian” for the reserve assets behind the USDC stablecoin, a cryptocurrency whose value is directly pegged to the U.S. dollar. Circle, a global crypto finance company, announced in a statement on Thursday.

The new partnership will assist in linking the traditional capital market with the digital asset market, Circle stated.

According to the report, both parties will collaborate to facilitate an exchange of expertise on issues regarding digital and traditional markets. Such issues include bridging traditional and digital capital markets, cash management for fiat and non-fiat payments, safekeeping of digital assets, investment management, and the exploration of digital cash for settlement purposes.

Roman Regelman, the Asset Servicing CEO and Head of Digital at BNY Mellon, talked about the development and said: “Our role as custodian of USDC reserves supports the broader market and provides value to clients, based on our role at the intersection of trust and innovation.”

Meanwhile, Jeremy Allaire, the co-Founder, Chairman and CEO of Circle, also commented on the new collaboration and stated that the partnership with BNY will enable their firm to “build bridges between traditional financial services and emerging digital asset markets, without sacrificing trust.”

By selecting the biggest custodian bank, Circle gets credibility, builds trust in its stablecoin brand, and positions its flagship product as a quality stablecoin. Likewise, partnership with the USDC stablecoin also gives BNY bank significant credibility and bolsters its brand among crypto clients.

Mellon bank is the world’s largest conventional custodian, with over $46 trillion in assets under custody. USDC is the second-largest stablecoin with almost a $52 billion market cap.

Expanding Access to Digital Assets to Institutions

In February, BNY Mellon announced developing a digital asset custody platform to allow institutional customers to gain crypto exposure. With the creation of the digital asset custody platform, the bank aims to enable institutions to store cryptocurrencies in BNY Mellon crypto wallets.

Mellon stated that the new digital asset custody service would gradually increase and integrate a variety of tokenized traditional and digital assets.

The new service has made the bank become the first to enter the global digital custody market, with intentions to expand worldwide based on demand, beginning with the U.S.

In the U.S., Mellon bank is the oldest banking organization founded at the end of the 18th century and is still running its business to date.

In early 2021, Mellon first entered into the crypto space when it announced its plans to begin financing Bitcoin and other digital currencies to its institutional clients, citing increased demand. Since then, the bank has expanded its crypto-related activities. In July last year, Grayscale Investments selected BNY Mellon as an asset servicing provider for Grayscale Bitcoin Trust.

BNY Mellon Launches Crypto Custody Service – Report

Bank of New York (BNY) Mellon has announced that its digital assets custody service is now live as it seeks to deepen its foothold in the emerging cryptocurrency ecosystem.

Ranked amongst the oldest and most capitalized banks in the United States, BNY Mellon said the digital assets custody solution will aid its role as a major bridge between the emerging crypto world and the broader traditional financial ecosystem.

“Touching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets,” said Robin Vince, Chief Executive Officer and President at BNY Mellon. “We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey.”

The bank said it launched the crypto custody service by integrating the technologies of both Fireblocks and Chainalysis, noting that these firms will help it maintain the adequate security and compliance necessary to stay relevant in the highly competitive industry now and in the future.

Arguably, BNY Mellon is positioning itself for a future that digital currencies may soon dominate. The banking giant said it commissioned a survey in which 91% of respondents who are institutional investors said they would be interested in injecting funds into tokenized products. As many as 41% of these respondents are currently holding crypto on their balance sheet, and 15% plan to acquire these assets in the near future.

With this realization, the bank said it is looking to float new products and solutions that can help it converge the needs of its traditional clients as well as those who consider crypto to be the future.

“As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients,” said Caroline Butler, CEO of Custody Services at BNY Mellon. “We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs.”

Besides BNY Mellon, Morgan Stanley, Goldman Sachs, and JPMorgan, amongst others, are also heavily invested in the space with their own tailored products and services hitting the market.

Circle Partners with Cross River Bank for USDC Production and Redemption

Circle, a leading global crypto finance company, has announced that it has partnered with Cross River Bank for producing and redeeming USD Coin (USDC), its flagship stablecoin pegged to the US dollar. Cross River Bank is a recognized leader in providing banking services to fintech and crypto firms, including Visa and Coinbase. In addition to Cross River Bank, Circle has also expanded relationships with other banking partners to assist with USDC redemption, including Bank of New York Mellon (BNY Mellon), which already provides custody services for Circle’s reserves.

The announcement comes after a harrowing weekend that saw Circle’s flagship USDC stablecoin break its peg to the dollar, falling below $0.90 early on Saturday. However, a series of moves by banks and regulators restored confidence in the token, and at the time of publication, USDC has recovered and trades at $0.99.

During the weekend, Circle issued a press release confirming that 100% of USDC reserves are safe and secure. The company also announced that it would complete the transfer of the remaining Silicon Valley Bank (SVB) cash to BNY Mellon, and liquidity operations for USDC will resume at banking open on Monday.

Circle’s announcement also noted that it had no exposure to Silvergate, the crypto-friendly bank that announced it would voluntarily liquidate its holdings as part of a takeover process by federal regulators. This weekend’s USDC turmoil was part of a broader financial catastrophe that started due to the collapse of SVB, the 16th-largest bank in the United States and a financial pillar of the tech and venture capital world. The failure of SVB triggered a panic as thousands of companies, including Circle, could not access billions in deposits. However, the Federal Reserve and other agencies calmed markets by announcing that depositors at SBV would be made whole.

Circle’s partnership with Cross River Bank and other banking partners is a significant step towards strengthening the stability and reliability of USDC, especially in the wake of recent events. Cross River Bank has a reputation for providing banking services to fintech and crypto firms and has been recognized for its services to Visa and Coinbase. BNY Mellon, on the other hand, already provides custody services for Circle’s reserves, making it a natural fit for assisting with USDC redemption.

Overall, Circle’s partnership with Cross River Bank and other banking partners underscores the importance of reliable banking partnerships for the stablecoin industry, which is still in its nascent stages. As the industry grows and matures, more partnerships like these are likely to emerge, providing greater stability and reliability for stablecoins like USDC.

Breaking: Swift, Chainlink, and Major Banks Achieve Multi-Blockchain Token Transfer

Swift, the global financial messaging service, announced on August 31, 2023, that it has successfully conducted a series of experiments to facilitate the transfer of tokenized assets across multiple blockchains. Collaborating with major financial institutions and Chainlink ($LINK), a Web3 services platform, Swift aims to solve the interoperability challenges that have been a barrier to the growth of tokenized asset markets.

Major banks involved are: Australia and New Zealand Banking Group Limited (ANZ), BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), The Depository Trust & Clearing Corporation (DTCC).

Key Findings

Swift’s experiments revealed that its existing infrastructure could serve as a “single point of entry for financial institutions moving tokenized assets while leveraging existing secure infrastructure.” The cooperative’s efforts are part of a broader strategy to maintain secure, global interoperability in a fragmented financial ecosystem.

Tom Zschach, Chief Innovation Officer at Swift, stated, “Interoperability is at the heart of everything we are doing at Swift to facilitate the seamless flow of value across the world […] Our experiments have demonstrated clearly that existing secure and trusted Swift infrastructure can provide that central point of connectivity, removing a huge hurdle in the development of tokenization and unlocking its potential.”

The Challenge of Interoperability

Tokenization is still in its early stages, but 97% of institutional investors believe it will revolutionize asset management. One of the main challenges is the lack of interoperability between different blockchains where tokenized assets are managed. Financial institutions currently have to build connections to each platform individually, leading to “significant operational challenges and cost.”

Technical Insights

Swift collaborated with financial institutions such as ANZ, BNP Paribas, and BNY Mellon, among others. Chainlink was used to securely connect the Swift network to the Ethereum Sepolia network. The experiments involved transfers of simulated tokenized assets between wallets on the same public Distributed Ledger Technology network, between two wallets on different public blockchains, and between a public and private blockchain network.

Future Prospects

Swift will continue to work with the financial community to identify the most compelling use cases for tokenized asset adoption. The most promising avenue, in the near term, appears to be in the secondary trading of non-listed assets and private markets.

Implications

The experiments signify a step forward in solving the interoperability problem that has been a bottleneck for the broader adoption of tokenized assets. By providing a single point of entry, Swift could potentially lower operational challenges and costs for financial institutions.

Conclusion

Swift’s experiments mark a significant milestone in the quest for interoperability in the tokenized asset landscape. While the technology is still in its infancy, Swift’s efforts could pave the way for more efficient and cost-effective management of digital assets, thereby accelerating their adoption in mainstream finance.