Nasdaq, the second-largest US stock market operator, has announced that they are to start to offering custody services for cryptocurrencies in order to capitalise on the huge uptick in demand that they have experienced from institutional investors over the past few years.
Currently, Nasdaq outsources its trading and surveillance software, and has already invested in crypto software and data, according to Nasdaq president Adena Friedman.
Stock exchanges versus crypto exchanges
Stock exchanges such as the Nasdaq have been extremely important over the past few decades, since they facilitate a large bulk of the trading that happens for stocks in the tech space in the US.
Nasdaq’s decision to begin to offer solutions to custody crypto themselves, and to potentially provide further opportunities for their clients, is a decision that directly puts them in competition with existing custodians such as BitGo, Anchorage Digital, and Coinbase.
Of course, it depends on how much further the Nasdaq wish to develop their business model to incorporate crypto. As an exchange first and foremost, it is quite likely that the Nasdaq will hope to capitalise on their preexisting market credibility to become a large institutional exchange for their clients as well as custodians.
The entrance of Nasdaq into the crypto markets isn’t just a huge stamp of legitimacy for the space, but also marks the growing maturity of cryptocurrencies as assets. Unlike other exchanges such as Coinbase, which has been in discussions with the SEC about potentially listing of securities, the Nasdaq specializes in listing securities – Nasdaq’s entry into the market could be hugely beneficial for the alt coin space as well as for Bitcoin.
Wall Street is fully adopting crypto
Despite the price action, the news that has been released over the past few weeks has been astonishingly bullish, and it seems that Wall Street has now fully arrived in the world of crypto and is ready to fully participate.
In addition to the announcements from Nasdaq, Blackrock also announced that they partnered with Coinbase in order to offer institutional services to their clients. As the largest asset manager in the world, this move has ushered in a high degree of confidence (despite falling prices across the board), and the move opens the door and lowers the barrier to entry for institutions even further.
Other Wall Street giants, such as Fidelity, have also announced that they are to offering trading and custody solutions for their institutional partners. Fidelity is another of the largest asset managers in the world, and their total assets under management, like Blackrock, also dwarf the size of the cryptocurrency industry.
— Michael Saylor⚡️ (@saylor) September 12, 2022
Mass institutional adoption
Since Michael Saylor’s entry into Bitcoin in 2020, the entire landscape for the crypto markets has changed, developed and matured.
The total crypto market cap reached trillions of dollars at its peak, and it is estimated that there are now over 100 million people who own cryptocurrencies worldwide, with over one billion forecast to become holders in one form or another by 2025.
This makes cryptocurrencies the fastest growing asset class in the world, and Bitcoin the first truly decentralised monetary network, that is already more significant for most of the world in terms of direct ownership than gold.
The main reason that the gold market cap is so much higher than Bitcoin’s remains the fact that the asset class is still relatively young. As more companies like Nasdaq come to offer more services to their clients, and as more institutions come to adopt Bitcoin, the next Bitcoin cycle is being set up very nicely, and with potential to finally challenge gold’s market cap.
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