By George Ward
Despite the recent banking crisis that has seen traditional financial institutions distancing themselves from crypto assets, Nasdaq has announced its entry into the virtual asset industry. According to reports, the New York-based Stock Exchange has announced plans to launch its crypto custody service towards the middle of this year.
Reading The Ground
The latest development comes after the Stock Exchange announced the launch of its digital asset business last September and has been quietly working to unveil its crypto division. In a statement, Ira Auerbach, a Nasdaq top-level executive, said that the firm had been steadily working to establish robust infrastructure and securing regulatory approvals that would enable it to serve its crypto clients.
Moreover, the stockbroker is on the verge of securing a limited-purpose trust firm charter from the New York Department of Financial Services (NYDFS) for its proposed crypto arm. Furthermore, Nasdaq noted that it plans to kickstart its crypto business by launching its custody services for two of the biggest digital assets by market capitalization, Bitcoin and Ethereum.
Auerbach told Bloomberg that the crypto custody is the first step of Nasdaq’s eventual entry into the digital asset market. It intends to offer a broad range of services with time.
The executive noted that the crypto arm of Nasdaq would offer specialized services to financial institutions. Moreover, Auerbach explained that Nasdaq’s crypto division aims to safeguard BTC and ETH availability for institutional investors.
The decline in the prices of crypto assets and the accompanied bankruptcies, especially that of FTX in November 2022, has paved the way for traditional finance heavyweights like Nasdaq to explore the crypto market.
TradFi Embraces Crypto Services
Last year’s prolonged crypto winter and numerous fallouts of crypto trading platforms have opened the door for equity firms like Nasdaq to move into the crypto space after overlooking the industry for nearly a decade. Meanwhile, Nasdaq’s recent move sees it join the likes of BlackRock, Fidelity Investments, and BNY Mellon as the traditional finance top guns offering digital assets services.
BlackRock, the asset management behemoth, reportedly has more than $10 trillion worth of assets under management and quietly moved into crypto early in March. Larry Fink, BlackRock’s CEO, reportedly praises cryptocurrency in his letter to the company’s board announcing the firm’s latest move.
In the letter, Fink explained that BlackRock pride itself on being innovative and that its exploration of digital assets is made with its clients in mind. The CEO acknowledged that while the industry is still evolving, there are elevated risks within, which calls for regulations in the sector.
Like BlackRock, Fidelity Investments also began offering crypto and custody services to clients early this month to close the gap created by the collapse of the crypto-friendly banks. However, BNY Mellon started offering crypto services to instructional customers towards the end of 2022 and has been steadily building on its digital asset arm since then.