Nasdaq has hit the pause button on setting up a digital custody service in the US, citing regulatory uncertainties as a reason, reports a Bloomberg article (paywalled). The news was conveyed by chair and CEO Adena Friedman during the firm’s Q2 results call with investors last week. The firm will also be halting its efforts to pursue a licence to operate in the sector.
Nasdaq launched Nasdaq Digital Assets, its crypto business in September last year. The original plan was to start with a digital custody service that would be established in Q2 this year. Even though the plan has now been curtailed, Adena Friedman assured that Nasdaq remains “committed to supporting the evolution of the digital assets ecosystem in a variety of ways” including “partnerships with potential bitcoin ETF issuers to support tradable exchange-listed products”.
In another article (paywalled) Bloomberg calls Nasdaq’s change of mind a “surprise move” that hints at the challenges traditional financial institutions are facing in the move into the crypto space. Crypto custody is seen as key to pushing the sector into the mainstream, but regulatory grey areas and costs are two main obstacles hindering progress.