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Nasdaq Pauses Launch of Crypto Custody Business Amid Regulatory Concerns
Background on Nasdaq's Decision
Nasdaq CEO Adena Friedman announced on Wednesday's earnings call that the company has decided to pause its plans to launch a crypto custody business in the US. The decision was made due to the shifting business and regulatory environment. However, Nasdaq will continue to focus on delivering technology capabilities to position itself as a leading digital asset software solutions provider globally.
Nasdaq's Commitment to the Digital Asset Ecosystem
Although halting the launch of the custody business, Nasdaq remains committed to supporting the evolution of the digital asset ecosystem in various ways. This includes ongoing engagement with regulators, providing comprehensive technology solutions across the trade lifecycle, and partnering with potential ETF issuers to support tradable exchange listed products. Nasdaq still provides company listing services for Coinbase and filed the paperwork for recent bitcoin ETF applications from BlackRock and others.
The Significance of Crypto Custody
Custody is viewed as a crucial component that can drive the crypto industry into the mainstream, especially in a post-FTX world. Efforts have been underway to develop solutions that separate the trading and custody functions of crypto exchanges, addressing the custody problem faced by institutions. Nasdaq's decision to pause its custody business plans comes at a time when market participants were hopeful that regulatory pressures would ease and allow for regulated products to bring clarity to the market.
Concerns About the US Losing its Crypto Edge
Societe Generale's crypto arm recently received approval from France's financial regulator to offer crypto services, including custody. This approval raises concerns that the US could lose its competitive edge in the crypto industry as its regulators continue to crack down while other jurisdictions embrace it. It remains to be seen how these regulatory differences will impact the global crypto landscape.
Implications for a New Business in the Crypto Custody Sector
Nasdaq's decision to pause its plans to launch a crypto custody business in the US has significant implications for a new business looking to enter the sector. The shifting business and regulatory environment that prompted Nasdaq's decision reflects the current challenges and uncertainties surrounding the crypto industry. As a result, new businesses must carefully consider these factors and navigate the evolving landscape to succeed in the crypto custody space.
The significance of crypto custody cannot be underestimated, as it is seen as a crucial component in driving the crypto industry into the mainstream. However, Nasdaq's hesitation to proceed with its custody business suggests that regulatory concerns continue to pose obstacles and may hinder the growth potential of the sector. This highlights the importance for new businesses to closely monitor and assess regulatory developments to ensure compliance and mitigate risks.
Furthermore, the concerns about the US potentially losing its competitive edge in the crypto industry cannot be ignored. As other jurisdictions, like France, embrace and regulate crypto services, new businesses must carefully consider the global landscape and the opportunities and challenges presented by different regulatory environments. Expanding into jurisdictions with more favorable regulations may provide a strategic advantage for new businesses aiming to establish themselves in the market.
In conclusion, the decision by Nasdaq to pause its crypto custody business launch underscores the complex nature of the regulatory environment and the challenges faced by new businesses in the sector. Navigating these challenges, closely monitoring regulatory developments, and considering international expansion may be necessary for new businesses to thrive in the crypto custody industry.
Article First Published at: https://www.cnbc.com/2023/07/19/nasdaq-pauses-plans-to-launch-crypto-custody-services-.html
