Despite the recent turmoil in the cryptocurrency market, with Bitcoin and other digital assets experiencing significant price swings, several firms are launching custody services to attract institutional investors. These services are designed to provide secure storage of digital assets, making them an essential component for the institutional adoption of cryptocurrencies. Nasdaq recently announced its plans to launch its crypto custody services by Q2’s end.
Nasdaq Inc. plans to launch its custody services for digital assets by the end of Q2, joining a growing number of traditional financial firms that could potentially act as crypto intermediaries, particularly in the wake of recent bankruptcies in the industry.
According to Ira Auerbach, Nasdaq’s Senior Vice President and Head of Digital Assets, the company is actively working to establish the required infrastructure and regulatory clearance for its custody services. To this end, Nasdaq has submitted an application for a limited-purpose trust company charter to the New York Department of Financial Services (NYDFS), which will oversee its custody service.
In September, Nasdaq announced its first major venture into the cryptocurrency space with a project that aims to offer safekeeping services for Bitcoin and Ether. According to Auerbach, this is the initial step in developing a comprehensive range of services for the company’s digital assets division, with future plans including financial institution executions.
Amidst recent closures of crypto-focused firms, traditional finance companies like Nasdaq are stepping up to bridge the gap. Notable examples include FTX exchange and banks Silvergate and Signature.
The recent failures of established cryptocurrency lenders, companies, and exchanges have presented an opportunity for other major players in the financial sector to offer safekeeping services for digital assets. In Q4 2022, BNY Mellon launched its own custody platform for digital assets, while Fidelity and BNP Paribas also entered the space, providing similar services. BNP Paribas partnered with Swiss digital asset safekeeping firm Metaco in 2022 to bolster their custody offerings.
Nasdaq Inc. has a history of involvement in the cryptocurrency market, having previously provided market surveillance technologies to various crypto exchanges. In Q1 2021, it launched the Hashdex Nasdaq Crypto Index ETF, based on its own index. The entrance of traditional financial players into the crypto industry, such as Nasdaq, is expected to boost the overall adoption of cryptocurrencies.
The launch of Nasdaq’s crypto custody services in Q2 2023 is a significant development for the cryptocurrency industry. It is expected to attract a large number of institutional investors who have been waiting for a trusted custodian to enter the market. Moreover, it will further legitimize the industry and help address one of the biggest obstacles to the institutional adoption of cryptocurrencies: security.
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