BNY customers can earn cryptocurrency pledge rewards without...

How will Bank of New York Mellon's institutional pledge service work?

Bank of New York Mellon has partnered with Galaxy to incorporate cryptocurrency pledge functionality into its digital asset custody platform, allowing institutional customers to receive blockchain rewards without having to transfer assets to other service providers. Galaxy will provide pledge infrastructure and collaborate as a design partner with Bank of New York Mellon, while the bank continues to expand its blockchain services. The service still requires regulatory approval, and the companies have not disclosed which proof-of-equity assets they will initially support. Under the plan structure, eligible customers will be able to pledge supporting tokens while retaining them within the Bank of New York Mellon custody framework. This arrangement is expected to eliminate one of the main operational obstacles institutions face when they want to gain pledge exposure but are reluctant to transfer assets between custodians, validators and third-party platforms.

Pledge allows token holders to lock in assets through verifiers to support the proof-of-stake blockchain in exchange for rewards. For large investors, this process involves custody controls, reporting requirements, tax calculations and counterparty reviews, and is far more complex than for individual token holders. Bank of New York Mellon and Galaxy plan to integrate custody, pledge, reporting and tax services into the same institutional product. A single platform reduces the number of external service providers and provides customers with a clearer record of asset ownership, reward revenue and trading activity.

Why is institutional custody important to pledges?

Institutional investors generally require stricter asset controls than retail cryptocurrency users. Funds, banks and asset management companies may need compliant custody arrangements, internal approval processes and detailed records before pledging digital assets. Moving tokens out of primary custodians increases additional operational and counterparty risk. Assets may need to pass through another wallet, pledge service provider or verifier operator, increasing the number of participants in the system and making reconciliations more difficult. Bank of New York Mellon plans to launch a service that aims to closely connect custody and pledge. Customers retain assets within the bank's existing framework, while Galaxy is responsible for the technical infrastructure needed to participate in blockchain verification. This model may make pledges more practical to institutions that already use Bank of New York Mellon for asset services and custody. It also helps customers separate investment decisions from the technical work needed to run validators, monitor network performance, and collect rewards. Regulatory approval remains an important condition. In the United States, pledge services have faced legal and regulatory review, especially when provided through centralized platforms. Bank of New York Mellon needs to ensure that its products comply with relevant rules for custody, securities, banking and digital asset services.

Investor Highlights

The Bank of New York Mellon partnership with Galaxy may make it easier for large investors to pledge by integrating custody, rewards and reporting into one framework. The commercial impact will depend on regulatory approvals, supported assets, and whether institutional needs go beyond the scope of underlying cryptocurrency custody.

How does pledge integrate into Bank of New York Mellon's blockchain strategy?

Bank of New York Mellon has been expanding its digital asset business since launching its cryptocurrency custody service in 2022. The bank was one of the first major financial institutions to provide regulated custody of assets such as Bitcoin and Ethereum. This pledge cooperation expands the business from passive custody to services that allow eligible cryptocurrency positions to generate online rewards. This move is also in line with Bank of New York Mellon's work direction to introduce blockchain infrastructure into traditional asset services. The bank recently stated that it is migrating core transfer agent records to blockchain technology. The plan will create a single on-chain ownership ledger and reduce reliance on multiple intermediaries to maintain records separately. Bank of New York Mellon also plans to launch 24-hour settlement of traditional and tokenized U.S. Treasury bonds in 2027. Before the end of this year, it expects to start testing tokenized treasury bonds on private blockchain. Together, these projects cover custody, pledge, fund management, ownership records and securities clearing. Bank of New York Mellon does not appear to view digital assets as a separate business, but instead integrates blockchain tools into the services it already provides to financial institutions.

What does Galaxy gain from the partnership?

Galaxy was able to reach Bank of New York Mellon's institutional customer base and played a role in building pledge services for one of the world's largest custodian banks. Bank of New York Mellon has tens of trillions of dollars in assets under custody and management, giving the partnership the potential to reach beyond native investors in cryptocurrencies. For Galaxy, the arrangement also demonstrates how cryptocurrency infrastructure providers can work with traditional financial institutions without banks having to build every technology component themselves. Galaxy will provide pledge technology, while Bank of New York Mellon will be responsible for custody relationships and institutional service architecture. The companies have not disclosed launch times, pricing or the networks they support. These details will determine whether the service competes directly with existing institutional pledge providers or serves primarily as an add-on feature to Bank of New York Mellon's existing custody customers. If approved, the cooperation could deepen the connection between traditional custody and blockchain-based benefits. This may also raise expectations for other large custodians to increase pledge services, as institutional investors 'demand for proof of equity assets is no longer limited to simple storage.