Nasdaq’s Digital Asset Unit – Will it Push Digital Asset Prices Up?

The Nasdaq (National Association of Securities Dealers Automated Quotations) Stock Market is the second largest stock market by market capitalisation only behind New York Stock Exchange. It recently launched a new unit which will exclusively deal with digital assets to cater to institutional investors.

To further its vision and they have hired Ira Auerbach to run a new digital division to deal with cryptocurrency. As of now, they plan to offer crypto custody and even expand to other services. This move by Nasdaq could result in a huge price recovery for the struggling cryptocurrency market.

In a statement to Bloomberg, the Nasdaq officials said that the digital assets unit has been launched in response to persistent institutional interest and demand for crypto services.

Tai Cohen, the company’s Executive Vice President in a statement to Bloomberg mentioned that the new group which is dedicated to digital assets will start off by offer custody services for Bitcoin (BTC) and Ether (ETH) to institutional investors. Nasdaq also got Ira Auerbach on its roll to head the new Nasdaq Digital Assets unit, she earlier ran prime broker services at Gemini, a crypto exchange.

Crypto Services Cropping Up On Wall Street

Not just Nasdaq but even the other firms on Wall Street are also increasing their involvement because of the persistent institutional investor interest in spite of the downturn that led to depression in prices and even cost jobs.

One such firm, BlackRock Inc. collaborated with Coinbase Inc. for ease of investment in Bitcoin for its investors. Charles Schwab Corporation, Citadel Securities, Fidelity Digital Assets and Virtu Financial and others backed a new exchange i.e., EDX Markets which will start trading some tokens this year.

In an interview, Auerbach said that they believe this next wave of the revolution is going to be driven by mass institutional adoption, and they can think of no better place to bring that trust and brand to the market than Nasdaq.

Although, Nasdaq has not gotten approval from the New York Department of Financial Services yet, but as a custodian of digital assets it will be competing with the likes of crypto firms like Bitgo, Anchorage Digital, Coinbase etc.

In one interview, Cohen said that “Custody is foundational. Based on custody, we may begin to create other solutions, provide execution and liquidity services, and consider how we support new markets.” Despite not currently having any immediate intent to launch a crypto exchange, Cohen said Nasdaq will assess the possibilities considering the regulatory framework and market conditions.

Nasdaq has been focused on diversifying its revenue sources beyond the exchange business where shares in public company’s trade. It has made investments in software, data, and other offerings.

Nasdaq has also outsourced its software to crypto players, including surveillance and trading tools. Crypto exchanges like Bitstamp are being provided with match engine technology by it.

Future Regulations

However, due to regulatory uncertainties, Nasdaq’s general policy has been more conservative, according to CEO Adena Friedman in a May Bloomberg interview. Cohen believes that the same can also create opportunity.

According to Cohen, “We know how to operate under regulatory regimes, and we continue to innovate under the rules of the road.” He further added that they will embrace regulation as it is introduced and Institutions also want them to work inside that legal framework.

Auerbach who will report to Cohen and serve as Senior Vice President and head of digital assets said that although it has no immediate intentions, Nasdaq is willing to explore joint ventures and other business opportunities with businesses that specialise in cryptocurrency. The team intends to expand internally and employ externally to reach 40 people by the end of the year, he said.

The Nasdaq can help in the investigation and reporting of instances of fraud, money laundering and manipulation for trading companies and banks via its Verafin and Surveillance products. Additionally, it has improved the technology it offers crypto companies for security and anti-crime software.

Conclusion

People were losing their trust in cryptocurrency, it being the most volatile asset right now and in a steep decline. But with this step by Nasdaq, and due to its position, it has given digital assets a much-needed reprieve and undoubtedly will result in a huge recovery in their prices.

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