Nasdaq To Enter Crypto Custody Market for Institutional Clients

If approved by the NYDFS, Nasdaq will become a custodian of digital assets


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key takeaways

  • The exchange will be competing with the likes of Coinbase and Anchorage
  • Former Gemini executive will be heading the new Nasdaq Digital Assets

Nasdaq, the second-largest stock exchange in the United States is looking to capitalize on institutional investors by offering crypto custody services for bitcoin and ether. 

Former global head of Gemini Prime will be joining the Nasdaq team to head the new division — Nasdaq Digital Assets. 

If approved by the New York Department of Financial Services (NYDFS), Nasdaq will become a custodian of digital assets, placing the stock exchange in direct competition with centralized crypto giants including Coinbase, Anchorage Digital and BitGo. 

Nasdaq is the latest Wall Street giant to take a greater interest in the blockchain technology space. The financial services giant has slowly been making moves in the cryptocurrency market. 

It currently outsources its surveillance and trading software to blockchain companies and has invested in crypto software and data, Nasdaq President Adena Friedman said in a statement. 

“The technology that underpins the digital asset ecosystem has the potential to transform markets over the long-term. To deliver on that opportunity, our focus will be to provide institutional-grade solutions that bring greater liquidity, integrity, and transparency to support the evolution,” Friedman said. 

Despite these moves, Friedman has previously said the exchange remains reticent in the absence of regulatory clarity.

The institutional crypto custody provider space has received a lot of market attention globally in recent years. 

Barclays — a British multinational bank invested “millions of dollars” into crypto custody firm Copper. Genesis trading, a digital trade brokerage, was able to clear regulator hurdles and expand its operations to UK, Japan, Canada, Turkey, Israel and Latin America in December last year.

Retail investors, once they become more familiar with blockchain technology, are more likely to make use of self-custody options, according to Charles Hamel, vice president of product at crypto hardware wallet manufacturer Ledger.

In an interview with Blockworks in May, Hamel said self-custodying digital assets is the “future,” a sentiment echoed by Coinbase CEO Brian Armstrong.

In a blog post published in June, Armstrong wrote, “The products that the most crypto-forward people are using today will be used by mainstream customers in a year, and by institutions a few years after that…we need to start integrating them today.”

For now, the regulatory and technical hurdles to self-custody at institutional scale, make solutions like those envisioned by Nasdaq more appealing. 

“Demand among institutional investors for engaging in digital assets has increased in recent years, and Nasdaq is well-positioned to accelerate broader adoption and drive sustainable growth,” said Tal Cohen, executive vice president and head of North American markets at Nasdaq.

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