Nasdaq Readies To Launch Crypto Custody

Nasdaq Inc. (NDAQ) is getting close to launching its crypto custody business in the second quarter of the year, Bloomberg reported Friday.

Nasdaq announced its foray into the digital assets business in September and will join traditional financial institutions such as Fidelity and BNY Mellon in offering crypto custody.

The new digital offering will be headed by Ira Auerbach, who joins the company from Gemini, which was caught in the crosshairs of the FTX collapse. Auerbach was the Global Head of Gemini Prime, which was the company's prime brokerage service.

The timing of Nasdaq's crypto custody launch could prove to be interesting. The U.S. Securities and Exchange Commission is keen on keeping a close eye on custodians of crypto assets. The regulator has also been proactively cracking down on the sector and warns of a "significant" risk of loss for investors.

Meanwhile, some traditional financial institutions are doubling down on their crypto offerings. Case in point, Fidelity's recent launch of a retail cryptocurrency trading platform.

Last year, Nasdaq said its vision for its digital assets business was driven by a desire to “advance and help facilitate broader institutional participation in digital assets” and “play a central role in combatting the rising threat of financial crime” in crypto.

To that effect, the company said it was expanding its anti-financial crime technology into the digital assets space. With its Verafin and Surveillance product offerings, Nasdaq expected to bring a suite of "crypto-specific detection capabilities to effectively mitigate risks and provide continuous monitoring of anti-money laundering, fraud detection, and market abuse."

Nasdaq noted crypto-based money laundering amounted to $8.6 billion in 2021, and institutional adoption of crypto may improve with the arrival of trusted names and tougher surveillance.