The NASDAQ company has just announced that it wants to enter the digital asset market. If the approach permeabilizes the links between traditional finance and the market of digital assets, others are already worried about the potential domination of the giants of Wall Street on this market. If regulatory authorities such as the SEC could constitute a brake on this type of initiative, let’s take a look at the ambitions of the Nasdaq company. A company that now targets institutions.
NASDAQ lays the first stones of its crypto offer!
The Nasdaq group, which also manages the Philadelphia and Boston stock exchanges, is not at its first attempt on the crypto market. For several months, the company has been offering market sourcing services for specialized players.
But the group obviously does not want to stop on such a good path. And now intends to offer a digital asset custody service. Initially, the proposed product will allow a custody service on Bitcoin and Ethereum. At least that’s what Tal Cohen, Nasdaq’s executive vice president for the North American market, says. Cohen also claims that this custody service could eventually form the cornerstone of Nasdaq’s crypto offering:
Conservation is fundamental. After custody, we can start developing other solutions, offering execution services, liquidity services and thinking about how we support new markets.
Good to know : While the NASDAQ is known as one of America’s flagship stock indices (NASDAQ 100), it is also the name of an exchange and the company that manages it.
The desire to develop this new service responds both to market demand, but also to Nasdaq’s desire to diversify its sources of income. The company has already invested in software in addition to its digital asset trading tools.
The company is targeting institutional investors
According Bloomberg data, the Nasdaq may soon launch a digital asset management platform. A platform through which the company targets institutional investors. In this way, the company could join other world-renowned players in this field such as Gemini or Fidelity.
Through this, the platform intends to take advantage of the growing interest of institutions for the main crypto projects such as Bitcoin or Ethereum. This growing interest from institutions is a result of demand from their end customers.
To give itself the means for its ambitions, Nasdaq uses recruitment in particular. The company has just poached Ira Auerbach, formerly of Gemini, last July. During his last job, the man ran the American giant’s prime brokerage services. His mission is now to lead the digital division of the company. This hiring should make it possible to launch these new products and eventually develop the crypto offer. Eventually, the company’s dedicated department could bring together more than 40 people.
Institutions, the key to the crypto market?
If Nasdaq is targeting the institutional market, it is obviously not by chance. Despite the bear market we are going through, these investors remain particularly involved in the digital asset segment. And for this, the multiplication of partnerships is a good variable to analyze.
Recently, BlackRock has partnered with Coinbase. A partnership that should make it easier for BlackRock customers to invest in digital assets. But the marriages between Wall Street actors and cryptosphere stakeholders don’t stop there. Fidelity Digital Assets and Virtu Financial are among the traditional players who have already announced their intentions to enter the crypto market.
Anyway, Auerbach seems to share this idea of a key variable for the crypto market:
We believe this next wave of revolution is going to be driven by mass institutional adoption. I can think of no better place to bring that trust and that brand to market than the Nasdaq.
If the product were to emerge on the market, Nasdaq would also enter into competition with certain platforms such as Coinbase who also does custody for institutions. Eventually, the company may even come up with an offer to trade digital assets.
Many consider that in the long term, there is a risk that the Wall Street giants will monopolize all the demand from institutional investors. As early as 2020, KPMG was already reporting the many opportunities related to product development in the crypto market.
What about the regulations?
For all stakeholders entering the market, the issue of regulation is now central. As such, the Nasdaq company seems to be using a cautious approach if we consider the statements of Adena Friedman, CEO. Tal Cohen abounds in the same direction:
We know how to operate within regulatory regimes and we continue to innovate within the rules of the road. Embracing regulation as it comes is something we do. And the institutions want us to operate within that framework.
For the time being, the company is still awaiting the green light from the regulator. The company also leaves the door open to signing partnerships with crypto-native companies.