BNY Mellon to be service provider for First Trust, SkyBridge Bitcoin ETF post-SEC approval

• BNY Mellon will be the ETF service provider for First Trust Advisors and SkyBridge Capital once it is approved by the Securities & Exchange Commission.
• An expert suggested that Bitcoin ETF approval by the regulator could come in a year or two.
• Bitcoin ETF proposals continue to grow as the adoption of cryptocurrencies has reached a tipping point.

The oldest bank in the United States will become the service provider for a proposed Bitcoin exchange-traded fund (ETF) by First Trust Advisors and SkyBridge Capital.

BNY Mellon to provide Bitcoin ETF basket operations

BNY Mellon has recently announced that it would be the Bitcoin ETF service provider for the fund following approval by the US Securities & Exchange Commission (SEC). 

Once the securities regulator approves the ETF, the bank would provide ETF basket operations, order taking, fund accounting, fund administration and transfer agency services. Alan Flanagan, Global Head of Fund Services, Asset Servicing at BNY Mellon, said:

The growing interest in digital assets presents a compelling opportunity to allow investors to explore cryptocurrency, and we are proud to work with First Trust to bring their new Bitcoin ETF to market.

First Trust and SkyBridge Capital’s ETF proposal was one of the several Bitcoin ETFs proposed recently. NYDIG, VanEck and Fidelity have filed applications for such a product with the US SEC – which has rejected all Bitcoin ETFs thus far. 

Bitcoin ETFs are coming ‘in a year or two’

While the SEC has already acknowledged VanEck’s Bitcoin ETF proposal, the countdown on the 45-day approval timeline has kickstarted.

Todd Rosenbluth, the head of ETF and mutual fund research at CFRA Research, suggested that the approval is not likely. According to Rosenbluth, it is more probable that the SEC will extend its timeline. He explained:

The SEC is less likely to pick a winner, we think, as to who comes first, and we’re more likely to see them – if they do approve any ETF – to approve multiple Bitcoin-related ETFs.

Several firms have entered, and Rosenbluth expects to see an approval in the coming year or two but has not given a firm time frame. 

Grayscale filed for a Bitcoin ETF and had been in discussions with the SEC but later withdrew its application due to the lack of progress in advancing crypto regulations. However, the asset manager has recently announced its commitment to converting its Bitcoin trust to an ETF.

Institutions in the US are now racing to come out with a crypto ETF, while Canada has already approved three Bitcoin ETFs, which account for 2.5% of the market share.

Bitcoin adoption has reached a tipping point

As Bitcoin adoption continues to grow among institutions, Fidelity’s Head of Digital Assets believes that it will continue “at an accelerated pace.”

President of Fidelity Digital Assets, Tom Jessop, explained that the maturation and adoption of the world’s largest cryptocurrency would continue “at a rapid pace in the coming years” since we have reached a tipping point.

With the unprecedented fiscal stimulus from central banks and governments worldwide as a response to the pandemic, the environment is now primed for further Bitcoin adoption.

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