The stock exchange is establishing the service to capitalise on institutional investors’ rising interest in cryptocurrencies.
Nasdaq Enters Crypto Custody Space
Nasdaq is offering a custody service for cryptocurrency for institutional investors.
The second-largest stock exchange in the world is making a wager on digital asset growth in the hopes of capitalising on institutional investors’ rising interest in the sector. Bloomberg initially reported the news on Tuesday afternoon.
NASDAQ MarketSite location at Times Square, New York. Image: andersphoto/Shutterstock
Bloomberg reports that Nasdaq Digital Assets would first offer custody services for Bitcoin and Ethereum. Ira Auerbach, a graduate of Gemini, will lead the new division, and the corporation intends to grow the team to 40 members by the end of 2022.
The acceptance of Nasdaq’s proposal to offer digital asset custody services is now pending at the New York Department of Financial Services. If NYDFS approves the proposal, Nasdaq will view crypto-native firms such as Coinbase and Anchored Digital as competitors. It will also face competition from BNY Mellon and State Street, two titans of traditional finance that have put comparable wagers on cryptocurrencies since the technology’s 2021 surge.
Despite the crypto industry’s terrible year in 2021, with Bitcoin, Ethereum, and most other assets selling over 70% below their highs, Wall Street has taken a greater interest in the field, claiming rising institutional demand for Bitcoin and other crypto assets. Blackrock, the world’s largest asset custody, teamed with Coinbase and created a Bitcoin trust fund last month to provide access to cryptocurrencies for its wealthiest customers.
Attracting Institutions to Crypto
While the price of cryptocurrencies rose in 2021, regular investors, not institutions accounted for most market activities that helped assets like Solana and Dogecoin climb. Institutions must invest in regulated products to gain exposure to the cryptocurrency market. Similarly, they must use custody services rather than maintaining private keys or retaining currencies on exchanges, creating a business opportunity for companies like Nasdaq.
“The institutions are coming” became a popular cliché in the cryptocurrency industry during the 2017 bull run. Early adopters pinned their hopes on the technology drawing large companies in the future. In 2018, it became evident that significant investors and businesses were paying careful attention to Bitcoin and the broader cryptocurrency ecosystem. Nasdaq’s new digital assets division is evidence that institutions have already arrived.
