BNY in Talks With Kraken Parent on Crypto Custody Deal

BNY has opened discussions with Payward on a partnership that spans six areas including crypto custody, trading and payments. Two people close to the talks described a potential arrangement that would let the bank handle parts of Kraken’s institutional operations while Payward supplies the crypto rails.

Why a 240-Year-Old Bank Is Suddenly Interested

That’s unexpected. BNY built its name on settling bonds and equities, not on-chain transfers. Now it appears willing to extend custody services to digital assets at a scale that would have seemed unlikely even two years ago.

Payward has spent the last eighteen months rebuilding after regulatory setbacks in several jurisdictions. A link to BNY could give clients a clearer path to fiat on-ramps and institutional-grade settlement. For BNY the upside would be exposure to trading volumes that still dwarf most traditional asset classes on busy days.

How This Compares With Earlier Bank-Crypto Experiments

State Street tested limited crypto custody in 2022 but kept the offering narrow. JPMorgan’s Onyx platform has stayed mostly inside its own network. A six-area deal between BNY and Payward would go further than either of those pilots by tying custody directly to live exchange flow.

Still, the talks remain preliminary. No term sheet has circulated yet, and both sides have kept details tight. If the structure mirrors other recent bank-crypto pacts, Payward would likely retain client relationships while BNY provides the balance-sheet support and compliance layer.

Market Reaction So Far

The news caught the market off guard when it surfaced late yesterday. Kraken’s spot bitcoin volumes ticked higher in the first hour after the reports, though the move faded by the open in Asia. BNY shares showed little reaction, which is typical for announcements this early in the process.

Traders who follow custody names noted the contrast with Coinbase’s existing partnership with BNY. That arrangement covers certain cold-storage services but stops short of live trading integration. Adding Kraken could create a second, larger test case inside the same bank.

Questions That Still Need Answers

How would regulatory oversight split between the two firms? What happens to client assets if one side faces enforcement action? And will the partnership extend to stablecoin issuance or remain focused on custody and settlement?

Those details will determine whether this stays a back-office arrangement or becomes a broader distribution channel for Kraken’s institutional desk. Watch position sizing here. Partnerships at this stage often shift or shrink before anything reaches clients.