Nasdaq is dropping its plans for a crypto custody service, which was slated to go live in the second quarter of this year, CEO Adena Friedman said Coindesk.
The exchange operator is also halting its efforts to pursue a license related to the business but will continue to build out its technology to handle crypto for clients.
In September 2022, the operator of the Nasdaq stock exchange had said that it was putting together the infrastructure and regulatory approval needed for a crypto custody service.
Nasdaq had applied to the New York Department of Financial Services (NYDFS) for a limited-purpose trust company, which would oversee the custody business.
The firm will however aim to continue supporting the digital asset industry in several ways, including partnerships with potential ETF issuers as well as providing technology for crypto custody (see First Crypto Criminal Case).
Nasdaq’s move is a blow to institutional adoption of crypto in the U.S., where regulators appear to be targeting crypto firms and related services, prompting concerns that there will be an exodus of such firms to more hospitable jurisdictions.
Now Nasdaq has opted to halt these plans and its effort to pursue the necessary license considering the shifting business and regulatory environment in the U.S.
Adena Friedman, CEO Nasdaq
For crypto custody in particular, the U.S. Securities and Exchange Commission has set up a high hurdle for publicly traded firms to get involved.
In an April 2022 accounting directive, known as Staff Accounting Bulletin No. 121, the SEC staff advised firms holding customers’ digital assets that they’d need to record their obligations as liabilities on the companies’ own balance sheets.
FATF Updates Guidance on Virtual Crypto Assets. Financial Action Task Force issues its annual targeted update on the implementation of its standards on Risk-Based Approach to Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs).
On June 27th 2023, the FATF published its report on country compliance with Recommendation 15 – including the Travel Rule – and updates on emerging risks and market developments. Global implementation and compliance remain relatively poor and behind most other financial sectors.
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By Parikshit Mishra, Jamie Crawley – CoinDesk reporters
