July 19, 2023 at 14:28 GMTModified date: August 9, 2023 at 09:40 GMT
July 19, 2023 at 14:28 GMT

Nasdaq drops crypto plans due to US regulation

Nasdaq has pulled out of hopes for a crypto custody service, which was due to go ahead later this year, according to CEO Adena Friedman today.

Nasdaq drops crypto plans due to US regulation

The Nasdaq stock exchange has pulled out of plans for a crypto custody service, which was due to go ahead later this year, according to its CEO Adena Friedman today.

Earlier this year, Nasdaq had stated that it was gathering the necessary regulatory approval required to set up a crypto custody service.

The company had approached the New York Department of Financial Services (NYDFS) for a limited-purpose trust firm that would manage the custody service.

However, it has now dropped plans to secure the necessary license due to regulation.

“This quarter, considering the shifting business and regulatory environment in the U.S., we have made the decision to halt our launch of the U.S. digital assets custodian business and our related efforts to pursue relevant license,” Friedman said. 

In an earnings call today, Friedman also added that Nasdaq will still aim to back the digital asset market, including possible ETF issuer partnerships.

The decision is another stumbling block for institutional adoption of crypto in the United States, where regulators continue to crack down on crypto companies, leading to firms leaving the country altogether.

Two crypto giants, Gemini and Crypto.com have recently chosen to set up branches in blockchain-friendlier jurisdictions outside of the US.

Gemini, owned by the Winklevoss brothers, announced expansion plans to acquire a licence which will enable it to operate in the United Arab Emirates and recently chose Ireland for its new European headquarters. Meanwhile, Crypto.com recently completed its licensing process in Singapore. 

In addition, former Seattle-based exchange, Bittrex announced its departure from the States as it filed for bankruptcy and ceased its operations. It came shortly after the SEC accused the exchange of operating without proper registration as a securities exchange.

Coinbase has also alluded to a potential exit from the United States, with its CEO Brian Armstrong hinting that the company could relocate to the United Kingdom if the regulatory situation does not improve. 

Other crypto firms under the ongoing SEC radar include Binance and its founder Changpeng ‘CZ’ Zhao, who face allegations in 13 charges that Binance Holdings Ltd., BAM Trading Services Inc., and CZ violated securities laws.