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Nasdaq To Launch Crypto Custody Service To Meet Growing Market Demand – Here’s What You Need To Know


Nasdaq To Launch Crypto Custody Service To Meet Growing Market Demand – Here’s What You Need To Know

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Nasdaq aims to launch its highly anticipated crypto custodial service by the end of the second quarter to meet growing institutional interest and demand for crypto services.

In an interview with Bloomberg on Friday, Ira Auerbach, senior vice president and head of Nasdaq Digital Assets, said Nasdaq is “moving forward with putting in place all necessary technical infrastructure and regulatory approvals.”

Auerbach said the global exchange group had applied to the New York Department of Financial Services for a charter of a limited-purpose trust company, which would oversee the new venture.

The new crypto custody service, which will offer institutional investors a safe way to dive into the digital asset industry, marks a major global securities market foray into the crypto space.

As noted, the company said in September last year it was looking to establish custodial services and appointed Auerbach to oversee Nasdaq Digital Assets, a new division.

Notably, the unit will initially offer custodial services for Bitcoin and Ether. Other services, including execution services and liquidity services, will be included over time.

“Guarding is fundamental. On the back end of custody, we can start developing other solutions, offering execution services, liquidity services and thinking about how we support new markets,” Cohen said at the time.

Institutional interest in crypto remains high

Nasdaq’s move comes at a time when traditional finance interest in crypto is on the rise.

In an October survey, BNY Mellon revealed that 91% of institutional investors in the bank are interested in investing in digital assets, with 97% saying “tokenization will revolutionize asset management” and be “good for the world.” industry”.

Additionally, 70% of the bank’s customers said they would increase their digital asset business if services such as custody and execution became available from recognized and trusted institutions. 88% of the bank’s clients said they continued with their projects despite the stock market crash of 2022.

The recent collapse of three major US banks in the space of a week and an intervention by US regulators to avert a banking crisis has also brought Bitcoin and the broader crypto market back into the spotlight as alternative banking system.

Yassine Elmandjra, analyst at Ark Invest, argued that the rally is a sign of Bitcoin’s value as a safe-haven asset. He claimed Bitcoin’s recent price behavior also suggests that growing regulatory pressure has had no impact on the major cryptocurrency, he wrote in the company’s weekly newsletter.

Nasdaq becomes a direct competitor to Coinbase and Binance

The announcement also comes at a time when some major crypto exchanges around the world, including FTX, collapsed during the recent crypto crisis, while others like Coinbase and Binance are facing increasing regulatory scrutiny.

Earlier this year, US authorities issued subpoenas to US hedge funds and market-making firms dealing with Binance, requesting records of their communications with the exchange.

Additionally, three US senators, including Elizabeth Warren, Chris Van Hollen and Roger Marshall, recently called on Binance “to be transparent about potentially illegal trading practices”, while accusing the exchange of being a “hotbed of illegal financial activities”.

Meanwhile, the SEC also recently sent a so-called “Wells Notice” to Coinbase, threatening the crypto exchange with legal action regarding some of its listed digital assets, its Coinbase Earn staking service, Coinbase Prime, and Coinbase Wallet.

All of this gives Nasdaq a perfect opportunity to move in and offer a trusted digital asset exchange for trading firms and other professional investors.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.