Nasdaq Halts Crypto Custody Service Projects

[ad_1]

Receive Free Cryptocurrency Updates

Well, send yourself a myFT Daily Digest email gathering the latest cryptocurrency news every morning.

The Nasdaq halted plans to launch a cryptocurrency custody service, in the latest sign that a U.S. regulatory crackdown is making big financial firms reluctant to forge deeper ties with the digital asset industry.

The tech-focused US exchange operator has been among the leaders in established financial markets in trying to develop a suitable crypto offering for its institutional clients.

On Wednesday, he cited regulatory uncertainty as the reason for scrapping plans to offer crypto custodial services, which had been a core part of the digital assets division it launched in September.

We like to operate in environments that have a fairly well-known regulatory underpinning, Nasdaq chief executive Adena Friedman said in an earnings call Wednesday. It’s just where were comfortable. The fundamental opportunity has changed over the past few months, and then the regulatory overhang has also changed, and I think that made us decide that now was not the right time.

In recent months, US regulators led by Gary Genslers Securities and Exchange Commission have issued a series of enforcement actions against several crypto leaders, including Nasdaq-listed exchange Coinbase and Binance, the largest crypto exchange. in the world. Binance also clashed with the Commodity Futures Trading Commission, which in March accused the exchange of illegally accessing US customers.

It shows how the shadow of the SEC’s crypto crackdown is hanging over the industry and impacting businesses, making them think twice.

This shows how the shadow of the SEC’s crypto crackdown is hanging over the industry and impacting companies, making them think twice, said Ilan Solot, co-president of digital assets at the company. of Marex financial services.

Following last year’s unprecedented crypto market crash, the safety of client assets came under the spotlight after the collapse of FTX exchange and lender Celsius left investors queuing in bankruptcy court.

The Nasdaq decision is a major setback for two reasons, said Charley Cooper, former chief of staff at the Commodity Futures Trading Commission. The industry needs credible custodians, and the Nasdaq is a household name with respect for regulators. If they throw in the towel, imagine how difficult it will be for smaller players to try to set up their own childcare services.

Recommended

The Nasdaq planned to hold client holdings of bitcoin and ether, the two most popular cryptocurrencies by the end of June, joining BNY Mellon and fund manager Fidelity to offer custodial services.

Friedman added that the focus of the exchanges for now would be to help clients with potential exchange-traded funds tied to crypto assets.

Several fund managers, including BlackRock, are currently working to gain approval for ETFs based on the spot price of bitcoin, which the SEC previously rejected due to a lack of regulatory oversight of underlying assets. underlyings.

[ad_2]