Nasdaq refuses to launch a service to store cryptocurrencies

The decision was influenced by the situation with the regulation of the crypto market in the United States

19.07.2023 - 15:45

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The stock market operator had said in March that it was putting together infrastructure and regulatory approval for the custodian service.

Nasdaq (NDAQ) is dropping its plans for a crypto custody service, which was slated to go live in the second quarter of this year, CEO Adena Friedman said in an earnings call on Wednesday.

In September 2022, the operator of the Nasdaq stock exchange had said that it was putting together the infrastructure and regulatory approval needed for a crypto custody service. The firm had applied to the New York Department of Financial Services (NYDFS) for a limited-purpose trust company, which would oversee the custody business.

Now Nasdaq has opted to halt these plans and its effort to pursue the necessary license "considering the shifting business and regulatory environment in the U.S.," Friedman said.

The firm will however aim to continue supporting the digital asset industry in several ways, including partnerships with potential ETF issuers as well as providing technology for crypto custody, she added. (Nasdaq , notably, is the would-be listing exchange partner in BlackRock's spot bitcoin ETF application, whose filing last month lifted the market's spirits.)

Nasdaq's move is a blow to institutional adoption of crypto in the U.S., where regulators appear to be targeting crypto firms and related services, prompting concerns that there will be an exodus of such firms to more hospitable jurisdictions.

For crypto custody in particular, the U.S. Securities and Exchange Commission has set up a high hurdle for publicly traded firms to get involved. In an April 2022 accounting directive, known as Staff Accounting Bulletin No. 121, the SEC staff advised firms holding customers’ digital assets that they’d need to record their obligations as liabilities on the companies’ own balance sheets.

This material is taken from the website https://www.coindesk.com.

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