Senior executives at New York Mellon Bank call for a rethinking of digital asset regulation around wallet structure, breaking the existing model

Caroline Butler, the global head of digital assets at BNY Mellon, recently called for a broad rethinking of digital asset regulation so that blockchain and smart contracts are not just 20% incremental improvements on existing infrastructure. One of the first actions by the new acting chairman of the SEC was to repeal SAB 121, a move that BNY Mellon has been lobbying for since its introduction.

Butler believes that regulation needs to be reimagined around the future of capital markets, which will revolve around wallet structures: "It should not conform to our patterns today because wallets should contain many things. This will break our pattern today where our institutions divide more according to asset classes. We should have a use case driven regulatory system managing and focusing on wallets. I think this is a huge shift."

In addition, Nadine Chakar, Managing Director and Global Head of Digital Assets at DTCC pointed out that given companies are divided into fixed income teams and derivatives teams, there needs to be a cultural shift within the market. She added: "While we're looking at disruptive technologies, I believe innovation will only be incremental for some time before industry achieves robust growth."