Nasdaq takes on Crypto Bet with custody service for institutions

Key points to remember

  • Nasdaq launches crypto custody service for institutional investors.
  • Nasdaq Digital Assets hopes to take advantage of the institutional market’s growing appetite for digital assets.
  • Institutional interest in crypto has grown since the space boomed in 2021.

Share this article

The exchange is launching the service to take advantage of the growing interest in crypto among institutional investors.

The Nasdaq enters the crypto custody space

Nasdaq launches crypto custody service for institutional investors.

The world’s second-largest stock exchange is betting on the growth of digital assets in hopes of benefiting from growing interest in the institutional market space. Bloomberg first report on the news Tuesday afternoon.

According to Bloomberg report, Nasdaq Digital Assets will initially launch with custodial services for Bitcoin and Ethereum. The new arm will be led by former Gemini Ira Auerbach and the company plans to expand the team to 40 people by the end of 2022.

Nasdaq has already filed an application to offer digital asset custody services with the New York Department of Financial Services, which is currently pending approval. If NYDFS accepts the bid, the Nasdaq will have crypto-native companies such as Coinbase and Anchorage Digital among its rivals. It will also face competition from BNY Mellon and State Street, two giants of the traditional finance world that have placed similar bets on crypto since the tech boomed in 2021.

Although the crypto market has had a difficult 2021 – with Bitcoin, Ethereum and most other major assets trading over 70% from last year’s highs – Wall Street is increasingly interested more to the market, citing the growing demand for Bitcoin and other crypto assets in the institutional market. Blackrock, the world’s largest asset manager, has partnered with Coinbase and launched a bitcoin trust fund last month to help its wealthy clients gain access to crypto.

Institutions attracting crypto

As crypto prices skyrocketed in 2021, most of the market activity that helped assets like Solana and Dogecoin soar came from retail participants rather than institutions. To gain exposure to the crypto market, institutions generally need to invest in regulated products. Likewise, they have to go through custodial services to store private keys or hold coins on the exchange, which has created a market opportunity for companies like the Nasdaq.

During the 2017 crypto bull run, “institutions are coming” became a popular meme in the crypto space as early adopters pinned their hopes on the technology attracting big players in the future. Developments over the past year changed the narrative as it became clear that major funds and companies were paying close attention to Bitcoin and the broader crypto space. Nasdaq’s new digital assets arm is further proof that institutions aren’t coming anymore, they’ve already arrived.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

Share this article