To start with, BNY Mellon will offer custodian services to its clients, then move forward to what its clients demand most.
The Bank of New York Mellon Corp (NYSE: BK) alias BNY Mellon has revealed plans to hold, issue, and transfer Bitcoin and other cryptocurrencies for its institutional clients later this year. Speaking in an interview, Mike Demissie, the head of advanced solutions at BNY Mellon said the bank will focus on the customers’ demand, besides the regulatory side.
To start with, BNY Mellon will offer custodian services to its clients, then move forward to what its clients demand most. “So that’s not just safekeeping of these assets, they want to leverage them for lending purposes, they want to leverage them for collateral. Then we are also looking at issuing digital assets, like tokenized securities, real assets,” Demissie noted.
BNY Mellon, Bitcoin and Crypto Industry
BNY Mellon prides on being one of the oldest banks in the United States with approximately $40 trillion in assets under custody and over $2 trillion in assets under management. Notably, its entrance into the crypto market will be a huge game-changer both for the retail and institutional investors. However, institutional investors are likely to benefit more from the move as they get access to a highly risky crypto industry.
As noted by news outlet Forbes, there has been a huge shift in institutional demand for digital assets in general seeking to diversify their balance sheet. In an email with the media outlet, Demissie noted that digital assets are the future, thus prudent for the bank to work towards secure platforms for digital assets.
BNY Mellon will venture into the crypto market at a time when the United States has offered much clarity into the industry. “Over the course of the last year, we have seen increasing regulatory clarity and guidelines to safely operate in the digital asset space,” says Demissie. Notably, the United States regulator, Office of the Comptroller of the Currency, gave green light to banks to use both public and private blockchains to process payments and other activities.
Institutional investors are seeking for alternative assets to hold their cash into as the dollar continues to inflate fueled by the Fed printing to supply government needs, particularly the stimulus packages.
Although digital assets are viewed as highly volatile, most of them led by bitcoin have shown properties of the store of value over time. For example, as the United States dollar continued to lose value in respect to other notable global currencies, Bitcoin and most altcoins rallied exponentially last year. As a result, both retail and institutional investors have opted to use digital assets especially to counter the coronavirus market crisis.
Perhaps other banks will follow the same path and not only offer custodian services but also add digital assets to their balance sheet.
A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies.
Mythology is my mystery!
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How Could It Affect Bitcoin?
While the COVID-19 pandemic has slowed down markets worldwide, especially the US stock market, several investors and traders went after alternative assets and options that could provide them a better store of value.
The United States Senate approved by a 50-49 party-line vote a $1.9 trillion coronavirus stimulus check, a plan already announced by Joe Biden at the beginning of January. This COVID-19 package relief includes the third round of stimulus checks that will be passed to president Biden, with a deadline of March 14 to make changes to the package before Biden gets to it.
What Does the COVID-19 Package Relief Plan Provide?
The COVID-19 package relief will include a series of direct payments to help boost the economy, hit by the coronavirus pandemic in 2020:
- Americans making over $75,000 per year will receive direct payments of $1,4000.
- Jobless Americans will receive $300 per week
- Couples who make over $150,000 will receive $2,900 as a household check
- One year increase to Child Tax Credits, which is a tax credit check that could be worth up to $2,000, depending on the income of households.
Why Is This Vital for Crypto?
- Investing in crypto: Americans are one of the most active cryptocurrency advocates in the world. While financial institutions and politicians are still debating and giving uncertain weather for cryptos, a good percentage of the population are trading or investing in them in some way, especially, Bitcoin. If Americans who received the check start using that money to invest in cryptocurrencies, the crypto market would likely see a boost by mid-year.
- Inflation: Stimulus Checks also mean more money issued —meaning, more money printed. The more money is printed, the higher the inflation as the value of fiat decreases. This is also another vital point for Bitcoin and most cryptocurrencies.
- Hedge against inflation: While the COVID-19 pandemic has slowed down markets worldwide, especially the US stock market, several investors and traders went after alternative assets and options that could provide them a better store of value.
When institutional investors and companies, like PayPal, Grayscale, and Tesla, started hoarding Bitcoin, many realized that BTC together with several altcoins, changed from just being a medium of exchange to become a better hedge against value decreasing fiat.
While the weather in the US is uncertain regarding cryptocurrencies, this would likely act as a boost for most digital assets, reaffirming the need for better financial methods as changes are taking place in the world, and most economies can’t rely on the same classical methods of printing money every month for citizens.
Back in February, Janet Yellen made several mixed statements about crypto, specifically, Bitcoin, calling it a “special concern” by outlining how crypto-assets are being used for “shady businesses”. Yellen added that Bitcoin and other cryptos can be used for financing terrorism, but a report by Chainalysis highlighted how Bitcoin only accounts for 0.34% of terrorism-related transactions, keeping the US dollar as the preferred currency chosen by terrorists.
In the last 24 hours, Bitcoin has recovered 0.50% in price, trading in volumes of $49k, with a decent bullish index showing demand is still strong.
I’m a finance journalist and copywriter with a keen interest in the fintech field. I have keen on blockchain technology and cryptocurrency and I believe it can reshape the way we see money and financial freedom.
Ethereum’s London Hard Fork with EIP 1559 Fee Market to Go Live This July
The EIP 1559 is a welcome move for Ethereum users that standardize the transaction fee across the network and reduces volatility. However, mining pools have placed a strong opposition to it.
As per the latest development, July 2021 is the scheduled period when the Ethereum Improvement Protocol (EIP) 1559 will go live. As per Ethereum’s core developers’ call on Friday, March 5th, five other EIPs along with EIP 1559 are likely to join the London hard fork.
The Ethereum fraternity has been eagerly awaiting the launch of EIP 1559 amind issues of the transaction fee. The ongoing EIP 1559 helps to lower the volatility of transaction fees on the Ethereum blockchain. Besides, it also fixes several ongoing issues with Ethereum’s user experience.
Traditionally, a user sends the gas fee to the miner to include the transaction in the block. However, with the EIP 1559 implementation, the gas fee shall go to the network itself in the form of “burn”. The “burn” is also dubbed as basefee with only an optional tip paid to the miners.
The Ethereum algorithm sets the “burn” fee thereby making it easier for users to pay a fair price. Thus, EIP 1559 replaces the supply/demand auction-style system with a standard rate implementation across the entire network. Ethereum creators are confident that the proposal will be “positive ono the long term price” of Ethereum. They say that a lower and predictable gas fee ensures that Ethereum isn’t only for the rich.
This new proposal has received solid support from users and the creators of Ethereum. However, it has garnered strong opposition from the miners and the mining pools who have been on the receiving end.
ETH Miners Place a Solid Opposition
Ethereum miners have enjoyed solid revenues recently on the backdrop of the high DeFi activity on the Ethereum blockchain. In February last month, the total mining revenue clocked a massive $1.3 billion with the average transaction fee striking an all-time high of over $37. As per data by CoinMetrics, 50% of the revenue came from fees alone.
The surge in transaction fees and the ETH price has shot up the network has power to more than 100% in a year’s time. Flexpool, a minority mining pool, has launched a marketing campaign against the EIP. It has also received support from majority pools like sparkPool and Ethermine.
Nearly 60% of the Ethereum hash power is currently against the implementation of the new proposal. Interestingly, F2Pool is the only largest pool in favor of the EIP with 10% hash power.
However, mining pools have few options to stop the EIP 1559 implementation. The bigger danger that currently hovers around is the 51% attack on the Ethereum network. However, the chances of this remain unlikely at this moment considering different financial incentives for not attacking the network.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Galaxy Digital Leverages Blockstream Facilities for Bitcoin Mining Operations
Despite the partnership announcement, Galaxy Digital Mining did not provide specific details on the number of machines deployed for the first installation.
Diversified financial services and investment management company in the digital asset sector Galaxy Digital (TSX: GLXY) said it is now hosting its newly-launched Bitcoin mining operations at Blockstream facilities. The diversified financial services firm noted that its Bitcoin-mining operations would use Blockstream facilities to initially deploy machines in Canada and the US.
CoinDesk said in a report that the partnership between Galaxy Digital and Bitcoin technology company Blockstream occurred less than two months after Galaxy Digital officially launched its mining operations.
In January, Galaxy Digital announced the launch of its miner financial services. At the time, the firm also added that it would begin its own Bitcoin mining business. Notably, providing financial services to Bitcoin miners has been a work-in-progress for Galaxy Digital since October 2020.
In addition, Galaxy Digital selected the former director of Mining at Fidelity, Amanda Fabiano, to head the new mining operations. Along with Fabiano, Galaxy Digital stated that there is a team of vast professionals working to advance the new unit. According to the press release, the new unit will be called Galaxy Digital Mining. The press release examined the functions of the new mining unit:
“…a new business unit committed to providing bitcoin miners with a comprehensive suite of financial services and products. Galaxy Digital Mining will serve as a one-stop financial services platform for miners-drawing the firm’s expertise in trading and risk management, investing and lending, and corporate advisory under one umbrella, tailored to the needs of the mining sector.”
Galaxy Digital Now Hosting Mining Operations Facilities
Now, Fabiano said that the company hopes to continually expand its mining operations. Despite the partnership announcement, Galaxy Digital Mining did not provide specific details on the number of machines deployed for the first installation. According to Fabiano, the financial services firm selected to use Blockchain’s facilities for “operational excellence.”
Blockstream CEO Adam Back also commented on the new partnership with Galaxy Digital. He said that Galaxy Digital has the opportunity to further growth with the Bitcoin technology company.
Earlier this year, Blockstream announced that it had purchased $25 million worth of Bitcoin mining machines from a Chinese manufacturer of crypto mining equipment MicroBT. Blockstream hopes to expand its mining operations with its new acquisition.
Data by MarketWatch revealed that Galaxy Digital stock had grown nearly 60% since the year began. The company’s stock has also spiked 189.68% in the last three months and almost 30% over the past month. With a market capitalization of $1.69 billion, Galaxy Digital stock has jumped 4.56% in the last five days. At press time, GLXY is closed at $17.41, a 5.74% loss over its previous close of $18.47.
Galaxy Digital has also partnered with CI Global Asset Management to launch a Bitcoin Fund in Canada.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
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