Nasdaq to launch digital asset custody services by the end of Q2
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(Kitco News) - Nasdaq Inc., the firm behind the Nasdaq stock market, has revealed that it plans to launch a custody service for digital assets by the end of the second quarter, according to a Bloomberg report.
This development comes amid a crackdown on ties between the banking industry and the crypto sector but serves as a sign of hope for many crypto proponents who see it as a move by larger firms to step in and fill the void left by smaller crypto-supporting banks that have experienced difficulties.
Ira Auerbach, senior vice president and head of Nasdaq Digital Assets, has said that the global exchange group is working to get all the necessary technical infrastructure and regulatory approvals in place so that it can launch its services in the near future.
Nasdaq has applied with the New York Department of Financial Services for a limited-purpose trust company charter, which would oversee the new business that was originally announced in September.
This marks Nasdaq’s first major foray into the world of cryptocurrencies. The lack of large, trusted custody solutions had been a significant barrier to adoption for institutional investors and larger firms.
The entry of major financial industry players like Nasdaq will help solve this issue, but many critics say the U.S. government also needs to develop a comprehensive regulatory framework so that institutions can know what they are getting into and avoid running afoul of financial laws.
Safekeeping Bitcoin and Ether would be the first step to building a broad suite of services for the group’s digital assets division, eventually, including execution for financial institutions, Auerbach said.
The collapse of the FTX exchange in November and the subsequent shuttering of Silvergate Bank, Silicon Valley Bank and Signature Bank have left a gaping hole in the bridge between crypto and the banking sector, giving an opportunity for traditional finance firms like Nasdaq the chance to establish themselves as trusted options that are less likely to disappear.
In October, Bank of New York Mellon (BNY Mellon), America’s oldest bank, became the first large U.S. banking institution to allow customers to hold their cryptocurrency assets alongside their traditional investments on the same platform.
Fidelity Investment has also become one of the more active large financial institutions in the crypto space, launching custody support for Ether (ETH) in October to go alongside its Bitcoin custody services, and providing retail traders access to crypto trading beginning last November.
|The U.S. will be the biggest loser from Operation Chokepoint 2.0, say crypto proponents|
Not all firms have been so lucky, however, including the crypto-friendly Custodia Bank, which has had its application to become a member of the Federal Reserve System and its application for a master account with the Federal Reserve rejected by the central bank.
Many have highlighted that this is a clear example of the ongoing stealth Operation Chokepoint 2.0, which critics say seeks to cut off crypto-friendly banks and establish systemically important banks that regulators work with on a regular basis as the main bridge to crypto, allowing regulators to exercise a greater degree of control over the industry.