Nasdaq Inc. will only launch a crypto exchange platform if regulatory clarity is achieved and the rate of institutional adoption for crypto assets grows. According to Tal Cohen, the Executive Vice President and Head of North American Markets at Nasdaq, the company will only consider launching a crypto trading platform once these conditions are met.
The announcement came during an Interview with Bloomberg TV on Tuesday, October 4, where Cohen spoke about the company’s openness to discuss the matter. According to his comments, however, the United States stock exchange believes the market is pretty saturated on the retail side, with many exchanges currently serving the retail customer base.
Growing demand for custody services
The announcement underscores Nasdaq’s report in September that the world’s second-largest stock exchange would start offering custody services for Bitcoin and Ether to institutional investors. As part of this commitment, the company brought Ira Auerbach to lead Nasdaq’s new Digital Assets Unit. Auerbach brings a successful record of experience and achievement, having spearheaded prime broker services at the Gemini cryptocurrency exchange. Auerbach said:
“We believe this next wave of the revolution will be driven by mass institutional adoption.”
Cohen articulated the multinational financial services corporation’s commitment to focus on its cryptocurrency custody services, noting that it provides a foundation for clients to be exposed to this asset class.
In the announcement, Nasdaq acknowledges that crypto custody services are in much demand, and the company sees an entry opportunity. Disclosing the company’s position, Cohen said:
“We think if you can safe-keep peoples’ assets, they will trust you to do everything else afterward.”
Other than safekeeping services, Cohen also disclosed Nasdaq’s plans to develop its execution capabilities to help the company facilitate the movement and transfer of assets.
Notably, the cryptocurrency custody services sector is recording growing demand as trading platforms continue to hinge operations around it.
Regulator Fears
Despite the market experiencing another price cycle, United States regulators have not offered clear policies and frameworks to help bring cryptocurrency markets under the legal purview. Led by Gary Gensler, the U.S. Securities and Exchanges Commission (SEC) has been very vocal about the vulnerabilities in the crypto market.
However, despite numerous appeals by Congress for better regulation, the country’s regulatory front remains blunt, with not much headway. While the world’s second-largest stock exchange has no immediate plans to launch a crypto exchange in the U.S., Nasdaq Inc. signed a collaboration with XP in 2021 to establish a crypto exchange. XP is the leading brokerage service provider in Brazil.
The SEC doubled down on its enforcement actions against cryptocurrency firms at the beginning of the year before expanding its enforcement task force. Despite this tactical advantage, there is still no regulatory clarity, and industry players see this as an unstable foundation upon which to build.
Senator Bill Hagerty introduced legislation in his Senate Banking Committee member capacity seeking a safe harbor for crypto exchanges from select SEC enforcement actions. It would appear that the absence of clear regulations is an obstacle for prospective new entrants like Nasdaq Inc. and existing crypto exchanges in the U.S. They continue to suffer charges and penalties.
