Wall Street Struggles With Crypto Custody: Nasdaq Decision Sparks Activity

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Source: Adobe / containment

A decision by the Nasdaq stock exchange to suspend plans to launch a crypto custody service has led other US companies to reconsider their planned push into crypto as well.

Following the Nasdaq news, major investment bank Citigroup is also taking time to rethink its approach to crypto, with Bloomberg reporting on Monday that the bank is “reviewing its partnership” with Swiss crypto custody software provider Metaco.

Meanwhile, State Street, another major U.S. asset manager, has terminated its deal with London-based crypto storage provider Copper Technologies, Bloomberg reported.

Similar to Nasdaq’s decision to move away from crypto, regulatory uncertainty in the United States is seen as a major reason for companies to distance themselves from the fledgling industry.

However, some things are also progressing in the relationship between traditional finance and crypto-native businesses.

In Europe, French banking giant Societe Generale has secured a license from the country’s regulator that will allow it to offer crypto custody services.

The granting of the license to Societe Generale earlier this month made it the first entity in France to receive a crypto license, with other companies such as Binance and Bitstamp simply “registered” and not “licensed”, the French regulator said at the time.

Meanwhile, UK-based asset manager Schroders is looking for a crypto custodian to partner with, Bloomberg previously reported.

According to sources Bloomberg spoke to in June, the company is actively seeking a third-party custodian to support its digital asset expansion, and Zodia Custody Ltd., a company majority-owned by British bank Standard Chartered, is among the shortlisted candidates.

Regulatory crackdown in the United States

In the United States, regulatory oversight of the crypto sector has intensified, with regulators like the Securities and Exchange Commission (SEC) cracking down on everything from compliance issues to outright scams in the space.

In Europe, however, the EU recently passed the bloc’s first comprehensive regulatory framework for crypto, the Crypto-Asset Markets Bill (MiCA).

Although it introduced tough new rules for the crypto industry, the EU’s MiCA rules have received at least some industry praise, with companies saying they provide the clarity they need to operate.

“The small details will be important, but overall we believe this is a pragmatic solution to the challenges we collectively face. There are now clear rules of the game for crypto exchanges to work in the EU,” Binance CEO Changpeng Zhao (CZ) said when the European Parliament passed MiCA.

Similarly, USDC issuer Circle has also expressed enthusiasm for regulatory developments in the EU, saying earlier this year that it is “double its European expansion”.

Praising EU member France in particular for its efforts to clarify crypto regulations, Circle CEO Jeremy Allaire said Circle aspires to become one of the first crypto companies to be fully licensed in France.

“France’s overall efforts towards innovation-driven crypto regulation are commendable and align closely with Circle’s vision for the future of the digital payments industry,” Allaire said at the time.

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