Nasdaq Opens Crypto Custody Service To Institutions

Key Points:

• Nasdaq competes with other financial institutions to attract institutional investors.
• In addition to offering crypto custody, the stock market operator is expanding its services.
• It has hired Gemini alumnus Ira Auerbach to head its digital division.

Nasdaq, a major financial services company, announced on September 20, 2022 that it would be creating a new division to focus specifically on the cryptocurrency industry. Nasdaq Digital Assets is working to make it easier for more institutional investors to participate in the growing crypto markets. Nasdaq Inc. plans to capitalize on the growing interest of wealthy investors in cryptocurrencies by making a significant entry into the space. If Nasdaq became a custodian of digital assets, it would compete with other firms such as Coinbase and Anchorage Digital.

Nasdaq’s announcement of a new digital asset marketplace underlines the exchange’s commitment to fostering wider participation in the digital asset market by providing trusted solutions for custody, liquidity, and integrity.

Tal Cohen, senior vice president and head of North American markets for the company, explained that the upcoming Digital Assets division will initially offer custody services for Bitcoin and Ethereum for institutional investors. According to Nasdaq, the company is not currently planning to launch a cryptocurrency exchange. However, it will consider its options based on future regulatory frameworks and market trends.

Nasdaq Partners Hashdex

Nasdaq partnered with Hashdex, an asset manager, in February 2021 to launch a digital assets curriculum for financial advisors. The two companies launched the Nasdaq Crypto Index ETF in March 2022. The launch was intended to provide information for financial advisors about the digital asset ecosystem, including investment options, regulations, taxes, etc.

Nasdaq recently announced a partnership with XP, Brazil’s largest brokerage firm, to launch a Bitcoin and cryptocurrency exchange in South America. Nasdaq’s move shows that cryptocurrency is gaining credibility on Wall Street.

Meanwhile, Nasdaq says it is working to expand its anti-financial crime technology capabilities for digital assets, having just rolled out a suite of crypto-specific detection capabilities. The exchange says it is critical to maintaining the integrity of the digital landscape in order to realize the full potential of digital assets, but it points out that cryptocurrency-based money laundering reached $8.6 billion in 2021, up 30% from the previous year.

Nasdaq has appointed Ira Auerbach as head of its new Digital Assets division. Auerbach formerly oversaw prime broker services at cryptocurrency exchange Gemini. But a source has revealed that Nasdaq’s institutional custody offering is still awaiting regulatory approval. In a Bloomberg report, Auerbach said the next wave of financial innovation will be driven by institutional adoption. The executive believes that Nasdaq is the best place to bring trust to the market.