Despite the current turbulence in the cryptocurrency market, where Bitcoin and other digital assets are seeing significant price swings, a number of businesses are establishing custody services in an effort to attract institutional investors. These businesses are made to provide secure storage for digital possessions, which makes them an essential component of the institutional adoption of cryptocurrencies. Recently, Nasdaq announced that it would begin offering cryptocurrency custody services by the end of Q2.
Nasdaq Steps Into the Crypto Sector
By the end of Q2, Nasdaq Inc. intends to introduce its custody services for digital assets, joining a growing number of traditional financial institutions that may conceivably serve as crypto intermediaries, particularly in the aftermath of recent bankruptcy filings within the industry.
According to Ira Auerbach, Senior Vice President and Head of Digital Property at Nasdaq, the corporation is making aggressive efforts to make sure that its custodial businesses have the necessary infrastructure and regulatory clearance. In order to accomplish this, Nasdaq has applied for a limited-purpose belief firm constitution with the New York Division of Financial Services (NYDFS), which has the authority to regulate its custody business.
Nasdaq launched its first major cryptocurrency business in September with a project that aims to provide safekeeping services for Bitcoin and Ether. According to Auerbach, this is the first step in developing a full range of services for the company’s digital assets division, with future ambitions including financial institution executions.
Nasdaq Teams Up With BNY Mellon and Constancy to Offer Cryptocurrency Custody Services
Nasdaq and other traditional finance companies are doing their best to fill the gap left by the recent closures of crypto-focused businesses. FTX transaction and the banks Silvergate and Signature are notable instances.
The recent collapses of well-known bitcoin lenders, businesses, and exchanges have created an opportunity for other major players in the financial sector to offer safeguarding services for digital assets. BNY Mellon debuted its personal custody platform for digital assets in the fall of 2022, while Constancy and BNP Paribas both entered the market to provide complementary services. In order to expand their selection of custody, BNP Paribas joined with Swiss digital asset storage company Metaco in 2022.
Since it has previously provided market surveillance tools to various cryptocurrency exchanges, Nasdaq Inc. has a history of involvement in the cryptocurrency sector. It introduced the Hashdex Nasdaq Crypto Index ETF in Q1 2021, largely based on its own index. The entry of established financial players into the cryptocurrency market, like as Nasdaq, is expected to accelerate cryptocurrency adoption in general.
The introduction of Nasdaq’s cryptocurrency custodial businesses in Q2 2023 will significantly advance the cryptocurrency market. Many institutional traders who have been waiting for a reliable custodian to enter the market are expected to be attracted by it. Additionally, it would further legitimize the industry and aid in overcoming one of the biggest barriers to institutional adoption of cryptocurrencies: security.