Nasdaq Shelves Crypto Custody Plan, Cites ‘Shifting Reg Environment’ in US

Nasdaq Shelves Crypto Custody Plan, Cites ‘Shifting Reg Environment’ in US

The American
stock exchange operator, Nasdaq, has abandoned its plan to expand its digital
asset offering by introducing cryptocurrency custody services to institutional investors. The launch
of the service was initially planned as the Wall Street giant’s first major crypto project.

Nasdaq Drops Crypto Custody Plan

Earlier in
March, Ira Auerbach, the Head of Nasdaq Digital Assets, disclosed that the
marketplace operator had applied for a limited-purpose trust company
charter from the New
York financial services regulator. The exchange desires the
license to float a digital asset custody service.

However, during
an earnings call held today
(Wednesday), Adena Friedman, the exchange’s Chief
Executive Officer, told
investors the company had decided to
suspend the plan “considering the shifting business and regulatory environment
in the US.”

to CoinDesk, Nasdaq’s CEO noted the firm
will continue to support the digital asset industry,
including efforts to
secure approval for spot Bitcoin (BTC) exchange-traded funds (ETFs) from the
US Securities and Exchange Commission (SEC).

Nasdaq, one
of the biggest stock exchanges in the world, is a global financial services
powerhouse. During the second quarter of 2023 ended June, the company generated $1.43 billion in revenue.

September last year, the
exchange launched its digital asset services
division, with plans to diversify into crypto custody solutions. However, the new decision to halt the plan is a major blow to institutional clients who in recent years started showing enthusiasm for the crypto industry.

Nasdaq’s decision was made at a time the SEC is waging a legal battle against Binance and Coinbase, the largest
crypto exchanges in the United States, alleging that both platforms
are operating without permission and engaging
in the sale of 'unregistered’ crypto assets securities.

Approves Spot BTC EFTs for Review

Meanwhile, in spite of
the SEC’s crackdown on digital asset firms in the United States, institutional
investors are showing renewed interest in spot bitcoin (BTC) exchange-traded funds
(ETFs). Last month, Nasdaq filed an application to list BlackRock’s spot BTC
ETF which is designed to track the price of BTC. The move triggered a flurry of submissions by other
US-based asset management firms.

On Tuesday
and Wednesday, six of these applications appeared on the Federal Register, signalling
that the SEC has formally acknowledged them. The inclusion in the register is the first step in a
process that leads up to the SEC’s decision on whether to accept or reject the applications. The applications that
appeared in the Register are those filed by BlackRock, Bitwise, VanEck,
WisdonTree, Fidelity and Invesco.

Magnates reported that the applications must appear in the Federal Register
before a final decision can be made on the applications. With this stage now
completed, the SEC has between 45 and 90 days to make its decision on the six

the SEC sought public opinion on the ETFs in a move that marked the
initial step for processing the filings. However, before then, Nasdaq and Cboe had to refile the applications on behalf
of the Wall Street firms, this time including details on a surveillance-sharing
agreement entered with Coinbase. The
agreement, which is part of the recommendations set by the SEC, requires
Coinbase to share any information about suspicious activities
in the digital asset market with the agency.

In 2021, the SEC approved the first BTC futures ETF.
However, it rejected applications for spot BTC ETFs made by firms, such as Fidelity and VanEck, saying they fall short of
anti-fraud and investor protection standards.

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This article was written by Solomon Oladipupo at

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