BNY Mellon, one of the world’s largest custodian banks with more than $30 trillion USD worth of assets currently under custody, is keen on diving deeper into blockchain technology’s potential in the trade finance arena.
Accordingly, the bank has just joined the Marco Polo Network — a trade finance business network for member banks to leverage open Application Programming Interfaces (APIs) via R3’s Corda blockchain. The network’s goal? To lower banks’ trade finance transaction costs and times while mitigating associated risks and optimizing data integration.
BNY Mellon is now among more than two dozen banks to have joined the network, which first launched in 2017.
The bank knows as well as anyone how the paper-intensive trade finance industry is ripe for digital disruption and blockchain may prove key in that regard, BNY Mellon’s global head of trade finance Joon Kim noted:
“We recognize tremendous potential to harness digital, data and advanced technology capabilities to transform essential trade finance processes to make them more efficient and secure. 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.”
The move doesn’t necessarily come as a surprise, as BNY Mellon is a major bank and blockchain is increasingly being explored by major stakeholders around the world as a way to optimize the trade finance industry.
For example, the Hong Kong Monetary Authority (HKMA) recently announced one of its subsidiaries would be collaborating with the digital currency research division of the People’s Bank of China (PBoC) in a proof of concept project that would link the PBoC Trade Finance Platform with HMKA’s eTradeConnect platform, with both systems being underpinned by blockchain.
BNY Mellon a Rising Presence in the Blockchain Space
A Bitcoin ETF has yet to materialize in America. But if perennial contender Bitwise had its way, BNY Mellon would have played a few key roles in the company’s recently rejected — albeit still under review — exchange-traded fund proposal.
Per a filing Bitwise made with the U.S. Securities and Exchange Commission (SEC) in September, the firm proposed that BNY Mellon would serve as both the administrator and transfer agent for the Bitwise Bitcoin ETF. The fund was rejected by the Commission last month, but the SEC has confirmed that officials are currently reviewing that rejection.
If it gets walked back, Bitwise and BNY Mellon might be in business after all, though it won’t be the bank’s first general foray into the arena.
Also in September, the backers of the VanEck SolidX Bitcoin Trust revealed they had brought on BNY Mellon to be administrator and transfer agent of the trust’s shares. The product is not an actual ETF, but its roll out does allow institutional investors to “finally gain exposure to bitcoin within a familiar context,” SolidX CEO Daniel Gallancy said at the time.
Back in the spring, BNY Mellon also made cryptoverse headlines when Bakkt — the crypto derivatives and trading startup backed by NYSE owners Intercontinental Exchange — revealed it was working with the bank to improve the security of its operations.
Specifically, the institutional collaboration involves the bank securing private keys, as Bakkt chief operating officer Adam White explained at the time:
“Bakkt is working closely with BNY Mellon to offer geographically-distributed storage of private keys secured by the bank. BNY Mellon has a longstanding history of safeguarding the assets of institutional clients such as hedge funds, asset managers, and broker dealers, and we’re excited to work with them.”
With all of these recent developments taken altogether, it would seem that BNY Mellon’s forays into the blockchain space may only be just beginning.