Nasdaq Gives Up on Crypto Custody Plans due to Emerging Regulatory Challenges
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The US remains highly interested in engaging with the crypto industry. Even major institutions and financial services businesses are interested in adding crypto as part of their service.
However, many of the largest players would have a lot to lose if the crypto regulatory situation goes the wrong way, and until there is more clarity, they will likely refrain from adopting digital assets.
The most recent example of this is Nasdaq, which recently said that it has given up on plans to add crypto custody services due to regulatory challenges.
DURING AN EARNINGS CALL, Nasdaq CEO Adena Friedman said as much yesterday, July 19th. She noted that the company was interested in offering crypto custody, but due to the US’s changing business and regulatory landscape, now is not the right time to launch such a service.
NEW: 📈 Nasdaq halts the rollout of its cryptocurrency custody service, which planned for launched in Q2 2023, due to regulatory risks in the 🇺🇸 USA. pic.twitter.com/KylgnVojik
— Bitcoin News (@BitcoinNewsCom) July 20, 2023
“Considering the shifting business and regulatory environment in the U.S., we’ve made the decision to halt our launch of the U.S. digital assets custodian business and our related efforts to pursue a relevant license.”
Nasdaq still believes in crypto
Nasdaq plans to continue to build and deliver technology capabilities that position it as a leading digital asset software solutions provider to the broader global industry.
Friedman further explained that the decision came despite the fact that Nasdaq has put in major efforts into establishing the infrastructure and gaining regulatory approval for the crypto custody service.
The company’s CEO stressed that the new development does not mean that Nasdaq would stop engaging with crypto firms. It has already partnered with potential Bitcoin ETF issuers. However, until the industry receives some regulatory clarity, Nasdaq cannot risk offering custody services.
Friedman added that the company will remain committed to supporting the evolution of the digital asset ecosystem in a number of different ways.
One of them is through its ongoing engagement with the country’s financial regulators, and another is the delivery of comprehensive technological solutions.
Nasdaq’s plans will remain shelved until the US gains regulatory clarity
Nasdaq initially announced its goal to launch a crypto custody service back in March of this year. The company hoped that the service would be up and running by the end of Q2 of this year, as the institutional interest and demand for crypto services was on the rise.
While retail investors prefer to hold their cryptos in private wallets, institutional investors want experts to do it for them.
Learning how to secure and manage digital currencies is too much work, and they prefer to have professionals do it instead.
As a result, custody services are a critical component of institutional investors’ engagement with digital assets.
Nasdaq understands this, and initially, it was planning to offer custody services for BTC and ETH, with plans to add support for other cryptos moving forward. In addition, it also intended to add other services, such as execution services, liquidity services, and alike.
However, all such plans have been put on hold, which only further highlights the regulatory problems in the US, as the regulators continue to battle one another over jurisdiction while nobody is trying to regulate the space.
