NASDAQ is Open to Becoming a Cryptocurrency Exchange

This should really come as no surprise. NASDAQ is open to becoming a cryptocurrency exchange. The regulated exchange says it is already providing its technology to other crypto exchanges so taking the additional step would not be that difficult.

Speaking on CNBC today, NASDAQ CEO Adena Friedman was questioned by Kevin O’Leary (of Shark Tank fame). Friedman said she agrees with the SEC that initial coin offerings (ICOs) need to be regulated.

“Certainly NASDAQ would consider becoming a crypto exchange over time,” said Friedman.

She thinks it is a pretty immature space right now.

“I believe that digital currencies will be something that will continue to persist,” added Freidman. It is just a matter of time as to how long it will take for crypto to mature.

Commenting on the statement by the NASDAQ CEO, Joseph Weinberg, OECD Think Tank Special Advisor & Shyft Chairman, said should Nasdaq become a crypto exchange;

“… this could be a great thing! Regulation, again, is a massive roadblock to something like this happening. You need to solve and create an informed model on self-regulation. By that, I mean how do you operate a bitcoin “marketplace” while at the same time enable a security token exchange. SROs take years to build from scratch. It’s not an easy process, but the entity that cracks it unlocks the holy grail in completing the bridge between traditional and the crypto ecosystem.”

Weinberg said there is a  division right now between crypto marketplaces and security token exchanges.

“However, because it’s all within the same asset class, a proper exchange should be both. Like the derivatives market, it’s highly complex. For example, if you move from a derivative to a future, those are two entirely different models, but it’s effectively two exchanges in one. Not to mention that crypto tokens present a tonne of edge cases in how they function, which makes the models quite different from the traditional way of thinking about exchanges.”

Yo Kwon, CEO of Hosho and co-founder of crypto exchange Coinsetter, said it was smart for traditional exchanges like NASDAQ to leverage their experience from existing exchanges like Gemini (a NASDAQ partner);

“There are unique challenges from a cybersecurity perspective that need to be accounted for such as wallet management. Someone who has already had to deal with those challenges will put NASDAQ on a better footing before they seek professional cybersecurity consultation. Wallet management is highly complex when covering different coins and tokens that have a variety of capabilities and best practices available. Most tokens released are managed by a smart contract that may or may not be secure.”

Kwon said that exchanges like NASDAQ need to be wary of not only their own security practices but also of the challenges of tokens and wallets.

“Many of the other aspects relating to cybersecurity of a prominent regulated exchange should already be taken care of. “

It is encouraging that NASDAQ is keenly interested in the crypto space and they are aware of the opportunity. This is most likely due in part to Friedman’s leadership. Soon after taking the helm of NASDAQ, she described the company as a global Fintech firm.


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