Nasdaq Inc. is launching its first significant initiative into cryptocurrencies, the second-largest stock exchange preparing to take advantage of growing interest among big-money investors in digital currencies.
According to Tal Cohen, the firm’s executive vice president and head of North American markets, a new organization will initially offer custody services for Bitcoin and Ether to institutional investors. The Nasdaq Digital Assets unit hired Ira Auerbach, who ran prime broker services at the Gemini cryptocurrency exchange to run operations.
Nasdaq, though not currently looking to launch a cryptocurrency exchange, will assess the market and opportunity should conditions present themselves as fruitful, the report says.
Nasdaq further stated that they will build a custody solution initially, which will include liquidity and execution services. The offering will integrate elements of both hot and cold crypto wallets.
This push comes after prominent Wall Street names have also introduced crypto services, shaking off a turbulent summer for the market. During this time, popular crypto tokens like bitcoin and Ethereum plummeted in value, and the failed terra stable coin project caused financial harm for investors.
Auerbach said that trading is “definitely further down the line. We believe custody is foundational.”
“Cryptocurrency is a huge market right now, and it’s growing. We’re seeing that people around the world are becoming more interested in blockchain technology as a result of the crash,” he highlighted. “For business, finance, and for society at large, distributed ledger technology is transformative.”
Nasdaq expressed an interest in possibly utilizing its various capital market solutions, such as surveillance, market abuse, and financial crime software program, which is widely utilized by conventional financial institutions. According to Chainalysis, last year saw a document of $14 billion worth of cryptocurrencies utilized for illicit activity, more than double the figures from the year 2020.
Valerie Bannert-Thurner, Nasdaq’s senior vice-president of anti-financial crime know-how stated: “The problem is not going away, if anything it is getting bigger.”
In the medium term, however, Nasdaq is open to collaboration and deal possibilities with crypto-native enterprises, although there are no immediate plans to make an acquisition. The team aims to develop internally and hire externally before year’s end, with 40 individuals on staff by then.
Nasdaq’s cautious approach to the market is still in effect, even though its overall strategy has been more conservative owing to concerns about regulation, according to Adena Friedman. However, according to Cohen, regulation can also provide opportunity. Cohen stated that they are well aware of how to operate under different regulatory regimes and will continue to innovate despite any rules or roadblocks. He went on to say that institutions appreciate their ability to work within the framework.