The corporation had filed for a limited-purpose trust company with the NYDFS earlier.
The decision by Nasdaq is a setback for the institutional adoption of cryptos in the U.S.
On Wednesday’s earnings call, CEO and President Adena Friedman said that Nasdaq (NDAQ) will not be launching its planned cryptocurrency custody service in the second quarter of this year.
The American stock exchange giant said in September 2022 that it was assembling the necessary infrastructure and regulatory permission to launch a cryptocurrency custody service. The corporation had filed for a limited-purpose trust company with the New York Department of Financial Services (NYDFS) to manage the custody operations.
Now, “considering the shifting business and regulatory environment in the U.S.,” Friedman said Nasdaq has decided to cease these plans and its endeavor to acquire the requisite license.
Setback for Institutional Crypto Adoption
However, she emphasized that the company’s goal is to continue assisting the digital asset market in a variety of ways, such as by forming agreements with future ETF issuers and by providing technology for crypto custody. The filing last month of BlackRock’s spot bitcoin ETF proposal, which has buoyed the market, has Nasdaq as a potential listing exchange partner.
Moreover, the decision by Nasdaq is a setback for the institutional adoption of cryptocurrencies in the United States, where authorities seem to be focusing on crypto companies and associated services, leading to worries that these businesses would relocate to more welcoming countries.
Furthermore, the United States Securities and Exchange Commission (SEC) has erected a substantial barrier to entry for publicly listed companies interested in crypto custody. Firms holding customers’ digital assets were told by the SEC in an April 2022 accounting instruction, known as Staff Accounting Bulletin No. 121, that they would need to report such commitments as liabilities on the firm’s own balance sheets.