Nasdaq Halts Plans for US Digital Asset Custodian Business

Nasdaq has halted its planned launch of a U.S. digital asset custodian business, citing the shifting business and regulatory environment.

At the same time, the company continues to build digital asset software solutions for the broader global industry, Nasdaq Chair and CEO Adena Friedman said Wednesday (July 19) during the company’s quarterly earnings call.

“The regulatory environment is fast changing,” Friedman said of the halting of the U.S. project. “It’s at least trying to evolve into something that’s understandable. Let’s see how it does over the next several months and maybe years.”

Nasdaq is most comfortable operating in environments that have a well-known regulatory underpinning, and there is currently a lack of clarity around the digital asset custodian business, Friedman said.

“As we looked at the opportunity set of just being a custodian — nothing else, just that one segment of the business — the fundamental business opportunity changed over the last several months and then the regulatory overlay and overhang changed as well,” Friedman said. “And I think that just made us decide that it’s not the right time for us to enter that business.”

For now, Nasdaq’s efforts in the digital asset space will focus on being a technology provider, Friedman added.

Nasdaq said in September that it was forming a new business that will promote institutional participation in digital assets and provide “trusted and institutional-grade solutions” focusing on custody, liquidity and integrity.

The cryptocurrency custody solution was to be the first offering of the new business, providing liquidity and execution services for financial institutions.

Nasdaq noted at the time that the new offering was subject to regulatory approval.

In the time since that September announcement, crypto companies have come under fire from U.S. regulators.

For example, the Securities and Exchange Commission (SEC) filed 13 charges against crypto asset trading platform Binance and its founder Changpeng Zhao on June 5, alleging a variety of securities law violations.

A day later, on June 6, the SEC sued cryptocurrency exchange Coinbase for allegedly violating securities laws, in a move that marked the latest step in the agency’s ongoing conflict with the largest crypto platform in the U.S.