The Bank of New York Mellon Corp. (BK) has just secured an exemption from the U.S. Securities and Exchange Commission’s (SEC) controversial SAB 121 rule. This move opens the door for BNY to enter the growing cryptocurrency custody market.

So, what does this mean? The SEC didn’t object to BNY’s plan to safeguard cryptocurrency assets for its exchange-traded product (ETP) clients. Importantly, these assets won’t need to be listed on the bank’s balance sheet, according to a Bloomberg report.

This is a big deal, especially given the ongoing discussions about the SAB 121 rule. This rule requires companies that hold customers' cryptocurrencies to record them on their balance sheets. Many banks have criticized it, saying it limits their ability to manage digital assets effectively.

BNY made it clear that the SEC’s non-objection is specific to its ETP use case. It doesn’t address the broader issue of how SAB 121 restricts banks from holding digital assets. BNY plans to keep talking with the Office of the Chief Accountant (OCA) about other potential uses.

As of June 30, BNY Mellon manages over $50 trillion in assets. Their decision to venture into the digital custody space could be influenced by the recent successful launches of spot Bitcoin (BTC/USD) and Ethereum (ETH/USD) exchange-traded funds (ETFs).

Currently, the market is heavily tilted towards Coinbase, which serves as the main custodian for most ETFs. However, its dominance faced some competition when Anchorage Digital Bank was appointed as the custodian for the ARK 21Shares Bitcoin ETF (ARKB).

This development comes amid a larger debate about the SEC’s SAB 121 rule. Republican lawmakers in both the Senate and House have urged the SEC to reconsider this controversial accounting rule for cryptocurrency assets. It’s worth noting that this rule is the only cryptocurrency-related legislation to pass through both chambers, though it was vetoed by the White House in May.

On Tuesday, shares of BNY closed at $71.87, down 0.27% during regular trading, according to data from Benzinga Pro.