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nasdaq is pausing plans to launch a crypto custody business, Chief Executive Officer Adena Friedman said on the company’s earnings call on Wednesday.
“Given the changing business and regulatory environment in the US, we have made the decision to halt our launch of the US digital asset custody business and our related efforts to obtain a relevant license,” it said. “However, we continue to build and deliver technology capabilities that position Nasdaq as a leading provider of digital asset software solutions to the broader global industry.”
Nasdaq still provides the list of companies for coin base and submitted documents for recent applications for bitcoin exchange-traded funds from black rock and others.
“More broadly, we remain committed to supporting the evolution of the digital asset ecosystem in a variety of ways, including through our ongoing engagement with regulators, the delivery of end-to-end technology solutions throughout the trading lifecycle, and through our partnerships with potential ETF issuers to support exchange-traded products,” added Friedman.
The exchange operator first plans revealed to develop the custody solution in September in conjunction with the formation of his crypto business, Nasdaq Digital Assets. It was expected to launch in the second quarter of this year while it awaited approval from the New York Department of Financial Services.
The Crypto custody issue is seen among institutions as the key to propelling the industry into the mainstream in a post-FTX world. Efforts have been made this year to create new solutions that decouple the trading and custody functions of cryptocurrency exchanges.
Nasdaq’s pause comes as a bit of a disappointment to those who have been heartened of late by the momentum around bitcoin ETF filings by BlackRock and other institutions, as well as the recent court ruling in the SEC’s lawsuit against Ripple. Investors and other market participants had hoped that some of the regulatory pressure that had weighed on the industry since the start of the year had been removed, and that allowing regulated products into the market might bring some clarity.
Meanwhile, Societe General’s crypto arm received approval Wednesday from France’s financial regulator to offer crypto services, including crypto custody. This adds to concerns that the US could lose its crypto edge as its regulators continue to crack down on the industry while other jurisdictions embrace it.