The Nasdaq stock exchange is taking its first steps into the crypto markets by offering custody services for Bitcoin and Ether to institutional investors.
The news comes as Ira Auerbach, former head of brokerage services at Gemini - the crypto exchange launched by the Winklevoss twins - joined Nasdaq as head of its new digital assets division.
Though custodian services don’t form a core part of Nasdaq’s business model – revenues are generated from the billions of dollars of trades handled daily – crypto custody may serve as a springboard for crypto trading services down the line.
“Custody is foundational,” North American head Tal Cohen said in an interview with Bloomberg, adding: “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.”
Speaking on the launch of the new division, Auerbach said: “We believe this next wave of the revolution is going to be driven by mass institutional adoption. I can think of no better place to bring that trust and brand to the market than Nasdaq.”
Wall Street goes crypto
Nasdaq’s new crypto custody offering isn’t quite the exchange’s first crypto foray.
Its Marketplace Services Platform has been providing cryptocurrency exchanges with high-volume trading technologies since 2020, with London-based exchange Bitstamp being a premier client.
Although most Wall Street giants have made a move into cryptocurrency one way or another, this marks the first time a major global stock exchange has made steps to offer crypto markets to retail investors.
Nasdaq will be competing with the likes of Coinbase (NASDAQ:COIN) and Binance, who offer both custody and spot markets, though some new players are also hitting the scene.
In September of this year, a consortium comprising Charles Schwab (NYSE:NYSE:SCHW), Citadel Securities, Fidelity, Paradigm and others launched a new digital asset exchange called EDXM.
In August, BlackRock (NYSE:BLK) announced a partnership with Coinbase to provide its institutional clients with access to crypto trading and custody services.
Regulatory wrangling
But regardless of stature, these institutions may come up against the Securities and Exchange Commission (SEC), who under Gary Gensler has remained extremely hawkish on the cryptocurrency sector.
The SEC has yet to approve spot Bitcoin trading - all the while being more than willing to give the nod to short BTC exchange-traded funds - despite repeated applications from the likes of VanEck and GrayScale.
Perhaps the Nasdaq’s heft could change the playing field for Bitcoin ETFs in the near future.