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Nasdaq has halted plans to launch a cryptocurrency custody service, within the newest signal {that a} US regulatory crackdown is inflicting mainstream monetary corporations to hesitate earlier than forging deeper hyperlinks with the digital property business.
The tech-focused US alternate operator has been among the many leaders in established monetary markets in making an attempt to develop a crypto providing appropriate for its institutional shoppers.
On Wednesday it cited regulatory uncertainty as the explanation for shelving plans to supply custody providers for crypto, which had been central to the digital property division it launched in September.
“We wish to function in environments which have a fairly well-known regulatory underpinning,” mentioned Adena Friedman, Nasdaq chief government on an earnings name on Wednesday. “That’s simply the place we’re snug. The basic alternative modified over the past a number of months, after which the regulatory overhang modified as properly, and I feel that simply made us resolve that it’s not the suitable time.”
In current months US regulators — led by Gary Gensler’s Securities and Trade Fee — have issued a blitz of enforcement actions towards a number of crypto bellwethers, together with Nasdaq-listed alternate Coinbase, and Binance, the world’s largest crypto alternate. Binance has additionally clashed with the Commodity Futures Buying and selling Fee, which in March accused the alternate of illegally accessing US clients.
“This exhibits how the shadow of the SEC’s crackdown on crypto is weighing down on the business and impacting companies, prompting them to suppose twice,” mentioned Ilan Solot, co-chair of digital property at monetary providers agency Marex.
After final 12 months’s unprecedented crypto market crash, the protection of buyer property was thrust into the highlight after the collapse of alternate FTX and lender Celsius left buyers ready in line at chapter court docket.
The Nasdaq choice “is a serious setback for 2 causes,” mentioned Charley Cooper, former chief of workers on the Commodity Futures Buying and selling Fee. “The business wants credible custodians, and Nasdaq is a family identify with the respect of regulators. In the event that they’re falling by the wayside, think about how troublesome it will likely be for lesser gamers making an attempt to arrange custody providers of their very own.”
Nasdaq deliberate to custody shopper holdings of bitcoin and ether — the 2 hottest cryptocurrencies — by the top of June, becoming a member of BNY Mellon and fund supervisor Constancy in providing safekeeping providers.
Friedman added that the alternate’s focus for now could be serving to shoppers with potential alternate traded funds linked to crypto property.
A number of fund managers, together with BlackRock, are presently engaged on profitable approval for ETFs based mostly on the spot worth of bitcoin — one thing the SEC has beforehand rejected due to a scarcity of regulatory supervision of the underlying property.
