Nasdaq ponders own crypto exchange

Posted: 25 April 2018 4:00 pm
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The stock exchange is currently supplying other cryptocurrency exchanges with technology services.

If and when the burgeoning cryptocurrency industry is able to gain regulatory approval, the United States’ Nasdaq Stock Market would contemplate opening its own digital currency exchange to support this evolution.

During an interview with CNBC’s Squawk Box, Nasdaq chief executive Adena Friedman revealed that the world’s second-largest stock exchange would be willing to institute its own cryptocurrency exchange over time.

“It’s an unregulated space today. So it’s not something we’ve decided to go into, becoming an exchange, but we are providing our technology now to other crypto exchanges,” she said.

This week, Nasdaq announced that it would be providing market surveillance technology to digital asset exchange Gemini, which is owned and operated by internet entrepreneurs Cameron and Tyler Winklevoss.

“The initial implementations that we’re doing with the blockchain are with our technologies. Gemini is going to be using our surveillance technology to help make sure they are providing a fair market for their participants.”

Nasdaq’s technology will also be used to supervise Gemini’s auction mechanism which determines the official settlement price for the bitcoin (XBT) futures contracts actively traded on Cboe’s Futures Exchange (CFE).

However, Friedman admitted that if, in time, “people are ready for a more regulated market, for something that really provides a fair experience for investors, certainly Nasdaq would consider becoming a crypto exchange.”

I think that it’s a pretty immature space right now. I certainly think that it’s going through that classic product life cycle. You’ve got early implementations, then you’ve got a big hype cycle and now we’re looking at the maturing of the space. I believe digital currencies are something that will continue to persist and it’s just a matter of how long will it take for that space to mature.

Nasdaq chief executive Adena Friedman on the development of cryptocurrencies

Many initial coin offerings (ICO) are facing heavy scrutiny by the Securities and Exchange Commission (SEC) to ensure that the unseasoned assets being offered to investors aren’t violating American securities laws.

An ICO is very similar to an initial public offering (IPO) but is used in the inaugural sale of cryptocurrencies.

“ICOs, to me, are different than cryptocurrencies,” Friedman said towards the end of the interview. “ICOs are really just using crypto to issue tokens to raise money, whereas cryptocurrencies are a currency play in terms of creating an alternative to the incumbent currencies that are out there. ICOs really do need to be regulated. I do believe the SEC is right, that those are securities offerings and need to be regulated as such.”

Earlier this week, CFE petitioned the Commodity Futures Trading Commission (CFTC) to lower the minimum buy and sell prices of its futures contracts, just a few months after the exchange launched the products.

New survey data has revealed that one in five United States’ financial institutions are examining the possibilities and ramifications of trading digital currencies, such as bitcoin, sometime in the next year.

You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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