Will Nasdaq Open a Cryptocurrency Exchange?

Is Nasdaq willing to venture into cryptocurrencies? According to an April interview with CNBC, they are. Nasdaq CEO Adena Friedman revealed that the prominent stock exchange is open to creating a future crypto exchange – if certain details can be ironed out first. Friedman revealed on CNBC’s Squawk Box that Nasdaq would “certainly consider becoming a crypto exchange over time.” But she made clear that to do so, the crypto space would need to mature beyond its current iteration – specifically in its regulatory environment.

2017’s crypto boom, which saw prices soar to around $20,000 in December 2017, made cryptocurrency almost impossible to ignore. As it attracted mainstream attention from investors, regulators inevitably followed. It is still nascent days for most regulatory efforts worldwide, including in the United States, where ‘are-they-or-aren’t-they’ securities questions dominate conversation at the government level. Nevertheless, a framework is slowly beginning to emerge. Consensus remains in flux on certain issues in the rapidly-evolving space, though Friedman believes one area to be unambiguous – initial coin offerings, or ICOs.

Friedman is not alone in her belief that the popular fundraising method “are securities…and need to be regulated as such." 2018 has seen the SEC devote a “significant portion of resources” to observing and eliminating the ever-present threat of ICO fraud, according to Chairman Jay Clayton. The watchdog commission has taken a largely pro-securities stance thus far, believing everything from crypto exchanges to digital wallets fall under that umbrella.

While it remains to be seen how early regulatory efforts will be codified into law, Nasdaq is not sitting on the sidelines. In March, they announced a partnership with Gemini, the popular cryptocurrency exchange founded by early bitcoin investors Tyler and Cameron Winklevoss. The deal allows Gemini to use Nasdaq’s SMARTS Market Surveillance technology to provide investors on the platform with a fair, secure “rules-based marketplace,” said CEO Tyler Winklevoss. The partnership affirms Nasdaq’s bullishness on cryptocurrency and their commitment to creating a positive, safe experience for investors. "I believe that digital currencies will continue to persist,” said Friedman. “It's just a matter of how long it will take for that space to mature.”

In the meantime, cryptocurrency continues to slowly creep into the mainstream and onto the radar of traditional institutions. As markets and their governing rules continue to evolve, Nasdaq and other major players appear ready to play ball – and investors stand to benefit.
 

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