The CEO of the American stock exchange Nasdaq stated during an earnings call on Wednesday morning that there was a “lack of clarity” in the cryptocurrency sector and that it was not the “right time” for Nasdaq to pursue a crypto custodian business at this time.
According to CEO Adena Friedman, they examined the opportunity set for just being a custodian—nothing else, just that one area of the business. Over the past few months, the opportunity shifted, and the legal framework and sort of overhang also changed.
Nasdaq Says it Will Not Abandon Digital Assets
In light of growing regulatory issues in the US, the stock exchange operator announced it is abandoning plans to introduce a cryptocurrency custody service. The solution was initially supposed to be introduced by the end of Q2 2023.
Adena Friedman, the CEO of Nasdaq stated that they have decided this quarter to put a stop to the launch of the U.S. digital assets custodian business and the related activities to acquire appropriate licenses in light of the changing business and regulatory environment in the United States.
The action was taken shortly after the stock exchange operator said that it was working to develop the infrastructure and secure the regulatory approval required for launching a cryptocurrency custody offering. The organization filed paperwork with the New York Department of Financial Services (NYDFS) to establish a limited-purpose trust firm to handle the custody business in order to accomplish this.
Due to the altering business and regulatory environment in the U.S., Nasdaq is currently taking a U-turn, according to Friedman. The company will continue to expand its digital asset operations, including its custody solution as a technological platform to support the larger, global digital assets market, the CEO emphasized.
Institutional Crypto Adoption Is Affected by Nasdaq’s Action
Friedman claimed that despite the late change of minds, Nasdaq still intended to support the digital asset market in a number of ways, including by forming alliances with potential exchange-traded fund (ETF) issuers.
The world’s largest asset management, BlackRock, submitted a proposal to start a spot Bitcoin ETF last month, sparking an extraordinary surge in cryptocurrency prices. Several other top traditional financial institutions quickly followed suit, bolstering the optimism of crypto investors about institutional acceptance of cryptocurrency.
In the US, where officials continue to press down on the sector and the associated service providers, Nasdaq’s U-turn still signals a setback to the widespread adoption of cryptocurrency. Therefore, there are worries that increased regulatory pressure may cause crypto companies to leave the US market for one with better regulatory climates.
