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Nasdaq has abandoned its long-awaited crypto custody service, a move prompted by the ever-changing regulatory climate in the US, according to company CEO Adena Friedman.
This strategic decision, which marks a significant setback in the institutional adoption of cryptocurrencies in the US, was revealed in an earnings call on Wednesday:
“This quarter, taking into account the changing business and regulatory environment in the United States, we made a decision to suspend our launch of the digital assets custodian business in the US and our related efforts to maintain the relevant license.”
Nasdaq has expressed its intentions to launch a crypto custody service, a commitment highlighted by a push for regulatory approval and the construction of the necessary infrastructure. The company is still seeking to obtain a limited purpose trust company license from the New York Department of Financial Services (NYDFS) to conduct custody business.
However, faced with an uncertain regulatory environment and increased scrutiny of crypto-related services, Nasdaq has chosen to rethink its involvement in this area.
This change could set a worrisome precedent for the digital asset industry, raising concerns of a possible migration of crypto companies to jurisdictions that are more amenable to their operations.
So Nasdaq, an entity that faces every type of regulation imaginable, doesn’t feel confident getting the regulatory clearance to run a *CUSTODY* service in the US.
It tells you what the US regulatory clarity is and its chilling effect. https://t.co/8JigtlcTr7
— Adam Cochran (adamscochran.eth) (@adamscochran) July 19, 2023
Despite this unexpected retreat, Nasdaq’s support for the digital asset sector will not completely disappear. Friedman stated that the company will continue to support the industry, highlighting its intentions to seek partnerships with potential ETF issuers:
“We continue to build and deliver the technology capabilities that position Nasdaq as a leading digital assets software solutions provider in the broader global industry.”