Nasdaq suspends plans to launch crypto custody services

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Michael Nagle | Bloomberg | Getty Images

Nasdaq is suspending plans to create a crypto custody business, CEO Adena Friedman said on the company’s earnings call on Wednesday.

“Given the evolving business and regulatory environment in the United States, we have made the decision to discontinue our launch of the U.S. digital asset custodian business and related efforts to obtain a relevant license,” she said. “However, we continue to develop and deliver technology capabilities that position Nasdaq as a leading provider of digital asset software solutions for the broader global industry.”

The Nasdaq is still providing the company list for Coinbase and has filed the paperwork for recent bitcoin ETF applications from BlackRock and others.

“More broadly, we remain committed to supporting the evolution of the digital asset ecosystem in a variety of ways, including through our ongoing engagement with regulators, providing comprehensive technology solutions across the transaction lifecycle, and through to our partnerships with potential ETF issuers to support exchange-traded listed products,” Friedman added.

The exchange operator first revealed plans to expand the custody solution in September with the founding of its crypto business, Nasdaq Digital Assets. It is expected to launch in the second quarter of this year pending approval from the New York Department of Financial Services.

Crypto custody issue is seen by institutions as key to pushing the industry into the mainstream in a post-FTX world. Efforts are underway this year to create new solutions that decouple the trading and custody functions of crypto exchanges.

The Nasdaq pause is a minor disappointment for those who have been buoyed recently by the momentum around spot bitcoin ETF filings by BlackRock and other institutions, as well as the recent court ruling in the SEC lawsuit. against Ripple. Investors and other market participants were hoping that some of the regulatory pressure that had weighed on the sector since the start of the year had been eased, and that allowing regulated products into the market would bring some clarity.

Meanwhile, the crypto arm of Societe Generale received approval from the French financial regulator on Wednesday to offer crypto services, including crypto custody. This adds to concerns that the US could lose its crypto edge as its regulators continue to crack down on the industry while other jurisdictions embrace it.

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