Nasdaq plans to capitalize on the growing demand for crypto-related services and help drive further innovation in the space. The news came amid endless turbulence and increased regulatory pressure.
In September 2022, Nasdaq announced the establishment of Nasdaq Digital Assets, a division dedicated to offering crypto custody services.
The move carried a competitive message, especially since other financial giants such as Fidelity Investments, BNY Mellon, and BlackRock tipped their toes into the crypto space.
A Big Move Into Crypto Custody
Speaking with Bloomberg, Ira Auerbach, Senior Vice President and Head of Nasdaq Digital Assets, said that the New York-based stock exchange has been developing an advanced custody solution for digital assets.
At the same time, Nasdaq has applied to provide digital asset custody services. The services are currently awaiting approval from the New York Department of Financial Services.
Initially, Bitcoin (BTC) and Ethereum (ETH) custody will be the key focuses. The exchange also targets to provide crypto services to financial institutions.
Adena Friedman, President and CEO of Nasdaq, previously stated that the exchange aims to provide several advanced solutions such as market technology, and crypto-related indexes for tradable products, or crypto-related financial crime, to serve the crypto ecosystem.
Nasdaq is well-established and popular with stock traders. The giant oversees multiple US and global equity markets, and now it is taking a huge bet on the cryptocurrency.
However, the move gives no sense of surprise as in fact the exchange partnered with some crypto exchanges including Gemini to provide them with market surveillance technology.
The technology enables these exchanges to monitor activities on their platforms and detect any fraudulent or manipulative practices, improving their overall security measures.
More Popular All The Time
Additionally, in February 2021, Nasdaq launched the Hashdex Nasdaq Crypto Index ETF in collaboration with Brazilian asset manager Hashdex.
Given all the records, Nasdaq has taken a cautious approach to the nascent industry. Instead of making waves, the exchange preferred to be the technology provider.
Providing technology to crypto exchanges allowed Nasdaq to capitalize on the growing demand for crypto-related services without having to assume the risks associated with trading or mining cryptocurrencies.
This strategy allowed the company to diversify its revenue streams and expand its customer base, minimizing its exposure to market volatility while waiting for the right time to engage itself in the space.
Wall Street Took Notice
Serious efforts have flooded into the market. No doubt Wall Street players have taken notice and are making steady moves toward the sector. This race is driven by the surging demand for exposure to the cryptocurrency market.
Institutions often adopt custodial services to store private keys or hold funds on exchanges to gain exposure to cryptocurrencies, and this has created an opportunity for companies like Nasdaq to offer crypto-related services.
In addition to Nasdaq, other major players in traditional finance, such as BlackRock, Mastercard, and BNY Mellon, have also entered the crypto space. BlackRock, the world’s largest asset manager, partnered with Coinbase and launched a Bitcoin trust fund in 2020 to give high-income clients access to cryptocurrencies.
Despite the bleak market outlook and regulatory uncertainty, these companies are recognizing the significant demand for crypto-related services and are taking action to meet that demand.
While the regulatory landscape for cryptocurrencies remains uncertain, the growing interest in the sector is simply too big to ignore.
Major players in traditional finance are planting their seeds even in the face of tightening regulatory scrutiny. These moves are likely to drive further innovations in the crypto space and encourage more institutional investors to enter the market.