NASDAQ has taken its first steps into the crypto space with two digital asset custody products for institutional clients, supporting Bitcoin and Ethereum, and a new group to oversee them.
The firm also onboarded Ira Auerbach, the former head of prime broker services at crypto exchange Gemini, to lead its NASDAQ Digital Assets division.
“We feel that custody is foundational to any other service that we build,” says Ira Auerbach. “The ability to hold on to our customers’ funds in a safe, secure, scalable and accessible manner is a key launch point for anything else we do in the future.”
The position is one of huge confidence, since the crypto world is not known to trust intermediaries. It’s one thing to hand over your private keys to NASDAQ custodians, and quite another to have your operations be led by a former head of exchange.
When asked why clients would choose a traditional financial player instead of a crypto-native firm to take custody of their digital assets, Senior Vice President Auerbach pointed to NASDAQ’s deep knowledge of the needs of institutional clients.
“We have a long history of working with these institutions, we know their pain points, we have products built internally to address these pain points,” Auerbach said. “We think we can make institutions much more comfortable and usher in a larger adoption of the ecosystem.”
NASDAQ is similarly expanding its anti-financial crime technology to fend against money laundering, fraud and market abuse in digital assets as well as traditional markets.
“The criminals don’t just operate on-chain,” said Valarie Bannert-Thurner, senior vice president of anti-financial crime technology at NASDAQ. “What we’re trying to do is look at the risk and try to identify the actual players that are doing the scams or manipulating the markets and not be limited to on-chain or off-chain. We’re saying let’s look at it across.”
Valarie Bannert-Thurner again points at the firm’s traditional knowledge as a point of strength. “The actual scams are not that different from what happened before. Money laundering is still money laundering, but done slightly differently because you have to find mechanisms to do it.”
The offering is still subject to regulatory approval, but Auberbach believes that the next financial revolution will be led by institutional adoption.
“There’s no better place than Nasdaq to bring trust to the market,” he said.
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