According to several people briefed by the company, equity exchange operator Nasdaq has been planning a move into institutional crypto custody service.
The company, which runs markets for U.S. and international equities, is not new to the cryptocurrency market; it has provided market surveillance technology to exchange venues for cryptocurrencies at least since 2018. The exchange declared the launch of the Hashdex Nasdaq Crypto Index ETF, which is based on its own index, in February 2021.
To compete with companies like Coinbase and FTX, the company has historically chosen to provide technology to participants in the cryptocurrency market rather than operating a market itself.
According to a source, the new offering is subject to regulatory approval. Nasdaq is also launching a new crypto-focused division, Nasdaq Digital Assets, in tandem with its foray into crypto custody.
Nasdaq announced the unit’s launch in a post-publication announcement. “underpins Nasdaq’s ambition to advance and help facilitate broader institutional participation in digital assets by providing trusted and institutional-grade solutions, focused on enhanced custody, liquidity and integrity.”
Ira Auerbach, a senior vice president at the firm who joined Nasdaq from Gemini, will lead the new unit.
“Nasdaq Digital Assets builds upon the successful solutions we have introduced in recent years to serve the digital assets ecosystem, including marketplace technology for digital asset exchanges, crypto-native anti-financial crime offerings, and crypto-related index solutions for tradable products,” Nasdaq CEO Adena Friedman said in a press release.
In the cryptocurrency industry, custody is a lucrative but crowded market, with institutional custody providers fetching multi-billion dollar valuations. Ledger, a provider of cryptocurrency wallets and custody services, achieved a valuation of $1.5 billion in June 2021, and Anchorage closed a $350 million funding round at a valuation of $3 billion in December 2021.