The New York-based exchange operator Nasdaq, on Wednesday, announced it was putting its crypto custody plans to rest, citing unclear regulatory issues in the US. The disclosure, made by Nasdaq’s CEO, Adena Friedman, did not disclose whether the exchange operator would resurrect the project in the future; however, the move is yet another blow to mainstream cryptocurrency adoption by institutions.
“Considering the shifting business and regulatory environment in the US, we’ve made the decision to halt our launch of the US digital asset custodian business and our related efforts to pursue a relevant license,” Friedman stated.
Friedman stated that Nasdaq loves to work in a well-regulated environment, which the US currently lacks following the recent clampdown of the Securities and Exchange Commission (SEC) on crypto firms. The Nasdaq boss cited that the regulatory narrative in the US changed in recent months, stunting the opportunity to invest in the crypto sector and prompting its decision.
Nasdaq Still Invested in Digital Assets
Nasdaq, however, noted that the change in plans doesn’t necessarily mean it will not invest in digital assets. According to Friedman, the exchange operator would continue to build and deliver technologies that would stamp its position as a leading digital asset software solutions provider.
Friedman stated that Nasdaq would continue to engage regulators in the country and further foster its partnership with exchange-traded fund (ETF) issuers. One of those partnerships saw Nasdaq resubmit BlackRock’s spot Bitcoin ETF filing.
Yet Another Blow for Crypto
Former chief of staff at the Commodity Futures Trading Commission (CFTC), Charley Cooper, speaking on the Nasdaq decision, stated that it is a major drawback for the crypto industry.
“The industry needs credible custodians, and Nasdaq is a household name with the respect of regulators. If they’re throwing in the towel, imagine how difficult it will be for lesser players trying to set up custody services of their own,” Cooper stated.
The co-chair of digital assets at financial services firm Marex, Ilan Solot, also added that the halt showed how much the shadow of the SEC’s crackdown on crypto is telling on the sector. He noted that the crackdown had affected business and even caused Nasdaq to reconsider its initial plan.
Nasdaq stated in September that it intended to offer crypto custody services to institutional traders as well as launch its crypto business, Nasdaq Digital Assets. It initially planned to launch the services in the second quarter of the year, pending the approval of the New York Department of Financial Services.
