Nasdaq Halts Crypto Custody Service Plans Amid Regulatory Concerns

Nasdaq Inc NDAQ decided to abandon its plans to offer a cryptocurrency custody service due to business and regulatory challenges, according to CEO Adena Friedman.

Friedman made the announcement during an earnings call on Wednesday, The Block reported.

"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 stated.

The stock exchange had been expecting approval from the New York Department of Financial Services by the end of June to start providing custody services to its clients.

This move was announced after the collapse of Three Arrows last July, and Nasdaq had continued to push forward despite a downturn in the cryptocurrency market.

The exchange isn't completely stepping away from the digital assets sector.

Friedman mentioned Nasdaq planned to continue developing technology to "position Nasdaq as a leading digital assets software solutions provider to the broader global industry."

In collaboration with BlackRock Inc BLK, Nasdaq proposed a spot Bitcoin BTC/USD ETF, which is currently under review by the U.S. Securities and Exchange Commission (SEC).

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The SEC has not yet approved such a product, having previously expressed concerns about potential fraud and manipulation.

Friedman emphasized Nasdaq's ongoing commitment to the digital assets ecosystem, stating, "More broadly, we remain committed to supporting the evolution of the digital assets ecosystem in a variety of ways, among them, through our ongoing engagement with regulators, the delivery of comprehensive technology solutions across the trade life cycle, and through our partnerships with potential ETF issuers to support tradable exchange-listed products."

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