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Nasdaq Halts Plans to Start Cryptocurrency Custody Business

Adena Friedman, NASDAQ CEO, recently announced that the exchange has made the decision to postpone the launch of its crypto custody business in the United States. Friedman attributed the reason behind the move to the everchanging business and regulatory landscape in the country. As a result, the company has decided to halt its attempts to acquire the necessary license for the custody service.

“However, NASDAQ remains committed to advancing in the digital asset space. We will focus on developing and delivering technology solutions, solidifying our position as a leading provider of digital asset software solutions in the global market,” she stated.

While NASDAQ has put its crypto custody plans on hold, the entity continues to be actively involved in the crypto space in other ways. The exchange still offers listing services for prominent companies such as Coinbase, and it has recently submitted paperwork for Bitcoin exchange-traded funds from reputable companies such as BlackRock.

Friedman emphasized that NASDAQ will actively support the ecosystem for digital assets. This support includes ongoing communication and cooperation with regulators, providing complete technology solutions for the entire trade life cycle and collaborating with potential ETF issuers to enable tradable exchange-listed products.

Initially, NASDAQ expressed its ambitions to create the custody service back in September when it launched its cryptocurrency division, NASDAQ Digital Assets. The initial plan was to begin the service in the second quarter of the following year, pending approval from the New York Department of Financial Services. Custody solutions have become crucial for institutional investors seeking to legitimize the crypto industry and bring it into the mainstream. The separation of custody and trading functions in crypto exchanges has been a focal point of ongoing efforts to develop innovative solutions.

NASDAQ’s decision to postpone its crypto custody business may disappoint some, as the sector has seen encouraging momentum, particularly with spot Bitcoin ETF registrations by BlackRock and others. Additionally, the recent court decision in the SEC’s lawsuit against Ripple raised hopes that some of the regulatory pressure would ease, bringing more clarity to the market.

However, with the regulatory environment in the United States still uncertain, many crypto companies have chosen to expand their operations outside the country. For instance, France’s securities regulator has approved Societe Generale’s cryptocurrency unit to provide crypto custody services, raising concerns that the United States may lose its competitive edge in the crypto market as other countries embrace it more openly.

NASDAQ’s backtracking may be a disappointment to many, but it is unlikely to shake the belief in industry actors such as Marathon Digital Holdings Inc. (NASDAQ: MARA) that blockchain technologies are coming of age and are here to stay.

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