Nasdaq to offer crypto custody for institutional investors
The Nasdaq Digital Assets unit will be headed by Gemini's former prime broker services lead and offer custody services for Bitcoin and Ethereum.
Nasdaq announced that it will launch a new group dedicated to digital assets in a bid to attract institutional clients.
Tal Cohen, the company’s executive president and head of North American markets, said that the new group will initially offer custody services for Bitcoin and Ethereum.
This is the first major push Nasdaq has made into the crypto industry. The second-largest stock exchange by trading volume has steered clear of the volatile crypto market, focusing on providing trading infrastructure and complying with strict U.S. regulations.
The increased appetite for cryptocurrencies institutional and accredited investors have shown has pushed the company’s heads to explore the new market. In an interview with Bloomberg, Cohen said that custody was “foundational” for the company as it represents a jumping board for other offerings.
“Off the back of custody, we can start to develop other solutions, offer execution services, liquidity services, and think about how we support new markets.”
Nasdaq is currently pending approval from the New York Department of Financial Services to become a registered custodian of digital assets. The company said it won’t be launching a crypto exchange anytime soon. However, Cohen said that they will consider it in the future if the regulatory environment and competitive landscape allow it.
The company already has a solid infrastructure set to launch a crypto exchange. Nasdaq outsources its proprietary surveillance and trading software to crypto companies, including providing its matching engine technology to Bitstamp.
To lead the new Nasdaq Digital Assets unit, the company hired Ira Auerbach, the former prime broker services lead at Gemini.
“We believe this next wave of the revolution is going to be driven by mass institutional adoption,” Auerbach said in an interview. “I can think of no better place to bring that trust and brand to the market than Nasdaq.”
The company’s new custodial offering will make it a direct competitor to Coinbase, Anchorage, and BitGo. Auerbach said that Nasdaq was open to exploring partnerships and deal opportunities with crypto-native firms, but had no acquisition plans.