Nasdaq, the global securities marketplace, has decided to put a pin on its plans to launch a cryptocurrency custody service for the time being, citing, “shifting business and regulatory environment in the United States.”
Despite the recent Ripple win against the US Securities and Exchange Commission (SEC) and intense fightback from the crypto community against authoritarian digital asset regulations, the industry is going through a troubled phase. Tension between the private and public sectors is beginning to heat up and companies like Coinbase have taken matters into their own hands by suing the SEC.
The SEC along with other financial watchdogs, including, Commodity Futures Trading Commission (CFTC) have continued to target crypto-focused companies and digital tokens, waging a heated war, that has created new uncertainty about the future of the market for digital assets. This uncertainty has taken a heavy toll on consumers, businesses as well as the entire financial landscape.
Why did Nasdaq Discard Crypto Custody Plans?
Amidst this regulatory uncertainty, Nasdaq has scrapped plans for a cryptocurrency custody service. During an earnings call on Wednesday, Nasdaq CEO Adena Friedman said the company has chosen to abandon its plans due to the changing business and regulatory landscape in the United States. Keeping in line with this decision, Nasdaq will be halting all efforts to procure all the licenses needed to let it operate a crypto custody service. She said,
“Considering the shifting business and regulatory environment in the U.S., we’ve made the decision to halt our launch of the U.S. digital assets custodian business and our related efforts to pursue a relevant license.”
Nasdaq halts plans for crypto custody service https://t.co/2e8sI2ZVvZ
— Financial Times (@FT) July 19, 2023
According to reports, despite the call to halt crypto custody services, Nasdaq will continue to engage with crypto companies, partnering with potential exchange-traded fund (ETF) issuers. The securities marketplace still provides the company listing for Coinbase and filed paperwork for recent Bitcoin ETF applications from BlackRock and others.
However, in the coming months, Nasdaq will continue to monitor the crypto market, especially since there are loads of changes in the pipeline to be deployed by the US lawmakers. One of the major events that looms on the horizon is the Federal Reserve’s decision on interest rate hikes.
According to a recent poll by Reuters, the U.S. Federal Reserve will raise its benchmark overnight interest rate by 25 basis points to the 5.25%-5.50% range on July 26. Nasdaq announced back in March that it aims to launch its much-anticipated crypto custody service by the end of the second quarter to meet the increasing institutional interest and demand for crypto services.
Crypto Firms Plan to Leave US Amid Crackdown
These uncertain policies have not just impacted Nasdaq, but several other firms as well. Due to the ongoing crypto regulatory crackdown in the US, many firms are seeking opportunities in other countries where crypto laws are either lax or well-defined.
Recently, Coinbase CEO Brian Armstrong revealed that the company could exit the US market and relocate its headquarters to the United Kingdom if the regulatory situation does not improve. Crypto lending platform Nexo revealed its intention to exit the US market in December 2022 after negotiations with regulators in the country came to a “dead end”.
Coinbase has said they may leave the USA. IMO, probably to the UK which is the Coinbase CEO went there this week.
If they do it would be a MASSIVE L for the USA.
— Lark Davis (@TheCryptoLark) April 18, 2023
Furthermore, Gemini, a crypto exchange founded by Tyler and Cameron Winklevoss, said it was seeking a license to operate in the Emirates. In March, Bittrex announced that it would halt operations in the United States, citing “the current U.S. regulatory and economic environment.”
Is U.S. Losing Crypto Race?
It seems that if the U.S. does not get its crypto affairs straight and support American blockchain innovations, the foundation of the world’s digital economy will be developed elsewhere. Meanwhile, the rest of the world is quickly surpassing the U.S. in attracting businesses to incorporate abroad.
In particular, the European Union (EU), the United Arab Emirates (UAE), Switzerland, Singapore, and Japan among other countries have taken formidable steps to regulate the use of cryptocurrencies and blockchain technology.