Nasdaq’s Digital Asset Unit – Will it Push Digital Asset Prices Up?

The Nasdaq (National Association of Securities Dealers Automated Quotations) Stock Market is the second largest stock market by market capitalisation only behind New York Stock Exchange. It recently launched a new unit which deals with digital assets to cater to institutional investors.

Nasdaq hired Ira Auerbach to run a new digital division to deal with cryptocurrency and plans to offer crypto custody and expand to other services. This move by Nasdaq could result in a ballistic price recovery for the struggling cryptocurrency market.

In a statement to Bloomberg, Nasdaq officials said that the digital assets unit has been launched in response to persistent institutional interest and demand for crypto services.

Tai Cohen, the company’s Executive Vice President and head of the North American Market in a statement to Bloomberg mentioned that the new group which is dedicated to digital assets will initially offer custody services for Bitcoin (BTC) and Ether (ETH) to institutional investors. Nasdaq also got Ira Auerbach on its roll to head the new Nasdaq Digital Assets unit, she earlier ran prime broker services at Gemini, a crypto exchange.

Crypto Services Cropping Up On Wall Street

Not just Nasdaq but even the other firms on Wall Street are also increasing their involvement because of the persistent institutional investor interest in spite of the downturn that lead to depression in prices and even cost jobs.

One such firm, BlackRock Inc. collaborated with Coinbase Inc. for ease of investment in Bitcoin for its investors. Charles Schwab Corporation, Citadel Securities, Fidelity Digital Assets and Virtu Financial and others backed a new exchange i.e., EDX Markets which will start trading some tokens this year.

In an interview, Auerbach said, “We believe this next wave of the revolution is going to be driven by mass institutional adoption, I can think of no better place to bring that trust and brand to the market than Nasdaq.”

Although, Nasdaq is pending approval from the New York Department of Financial Services, as a custodian of digital assets it will be competing with the likes of crypto firms like Bitgo, Coinbase, Anchorage Digital etc.

Cohen stated in an interview that “Custody is foundational. Based on custody, we may begin to create other solutions, provide execution and liquidity services, and consider how we support new markets.”

Despite not currently having any immediate intent to launch a crypto exchange, Cohen said Nasdaq will assess the possibilities considering the regulatory framework and market conditions.

Nasdaq has been focused on diversifying its revenue sources beyond the exchange business where shares in public company’s trade. It has made investments in software, data and other offerings.

Nasdaq has also outsourced its software to crypto players, including surveillance and trading tools. Crypto exchanges like Bitstamp are being provided with match engine technology by it.

Future Regulations

Nevertheless, Nasdaq’s general strategy has been more conservative due to regulatory uncertainty, according to Chief Executive Officer Adena Friedman in a May Bloomberg interview. Cohen claims that the same can also create opportunity.

According to Cohen, “We know how to operate under regulatory regimes, and we continue to innovate under the rules of the road.” She further added that they will embrace regulation as it is introduced and Institutions also want them to work inside that legal framework.

Auerbach, who will serve as senior Vice President and head of digital assets and report to Cohen said that Nasdaq is also open to looking into joint ventures and other business prospects with companies that specialise in cryptocurrencies, although it has no immediate plans to make an acquisition. To reach 40 individuals by the end of the year, the team plans to grow internally and hire externally, he said.

Through its Verafin and Surveillance products, which can assist in the investigation and reporting of instances of money laundering, fraud, and manipulation for banks and trading companies, Nasdaq has also increased the technology it provides crypto companies related to protection and anti-crime software.

Conclusion

People were losing their trust in cryptocurrency, it being the most volatile assets right now and in steep decline. But with this step by Nasdaq, and due to its position, it has been given digital assets a much-needed reprieve and undoubtedly will result in a huge recovery in their prices.

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