Nasdaq, the global stock exchange operator, plans to begin offering custody services for digital assets by the end of June 2023. This move demonstrates increased institutional interest in the cryptocurrency industry, despite widespread regulatory uncertainty and suspicion of cryptocurrencies in some countries.
Ira Auerbach, senior vice president and head of Nasdaq Digital Assets, explained that the company has been working hard to meet all the regulatory approvals and technical infrastructure necessary for the launch of its crypto custody services. According to Bloomberg, Nasdaq has applied to the New York State Department of Financial Services (NYSDFS) for a limited-purpose trust company charter to supervise the new business.
Nasdaq’s new business will initially offer custody services for Bitcoin (BTC) and Ethereum (ETH), with plans to expand its offerings to include execution for financial institutions. Auerbach believes that the move is a response to increasing demand from clients for access to digital assets. “Institutions are definitely getting more comfortable with the idea of investing in digital assets,” said Auerbach.
We’re seeing more and more demand from our clients for access to these assets, and we want to be able to provide them with a secure and reliable solution.
This development by Nasdaq comes after similar initiatives by other large financial firms, including the oldest bank in the U.S., BNY Mellon, and the investment giant Fidelity. In early October 2022, BNY Mellon became the first mainstream lender to roll out crypto services, offering crypto access to select clients interested in Bitcoin and Ethereum, alongside its traditional products on the same platform. Shortly after that, Fidelity announced plans to offer its institutional users access to Ethereum through its digital asset subsidiary, allowing customers to buy, sell, and transfer the asset starting in late October 2022.
The adoption of digital assets continues to gain momentum, and more financial institutions are expected to enter the crypto space. Nasdaq’s move into crypto custody services is a step towards meeting the needs of institutional clients and filling the void left by the bankruptcy of FTX. As more financial institutions enter the crypto space, the industry is expected to continue to grow and mature.
Moreover, the decision by Nasdaq to offer custody services for digital assets is a significant development for the industry, as it signals a growing institutional interest in digital assets. With institutional investors’ entry, cryptocurrencies have been rapidly gaining mainstream acceptance, with many countries and companies looking to establish a regulatory framework for digital assets.
Furthermore, institutional investors are looking to cryptocurrencies as an alternative asset class that can offer a hedge against inflation and diversification benefits for their portfolios. The increasing interest in cryptocurrencies by institutional investors has been driving the market’s growth, and it is expected to continue to do so.
BNY Mellon, the oldest bank in the US, launched its digital asset custody services in October 2022, offering crypto access to select clients interested in Bitcoin and Ethereum, alongside its traditional products on the same platform. BNY Mellon’s custody offering is part of its broader push into the crypto space, which includes plans to provide clients with trading and financing services for digital assets.
Fidelity, another major financial institution, launched its digital asset subsidiary, Fidelity Digital Assets, in 2018, which provides custody services for Bitcoin and Ethereum. In October 2022, Fidelity announced plans to offer its institutional users access to Ethereum, allowing customers to buy, sell, and transfer the asset on its platform.
Nasdaq’s move into the crypto custody space is a significant development for the industry, as it signals a growing institutional interest in digital assets. With the increasing demand from institutional investors, cryptocurrencies have been rapidly gaining mainstream acceptance. The adoption of digital assets continues to gain momentum, and more financial institutions are expected to enter the crypto space to meet the growing demand for secure custody services.
Nasdaq’s move into the crypto space is a sign of the increasing institutional interest in digital assets. As more financial institutions enter the crypto space, the industry is expected to continue to grow and mature. Nasdaq’s entry into crypto custody services is a step towards meeting the needs of institutional clients and filling the void left by the bankruptcy of FTX.