Nasdaq May Field a Crypto Exchange in the Future
When somebody says “stock exchange”, people immediately think Nasdaq. Talking about crypto exchanges, on the other hand, doesn’t evoke the same mental connection – with Coinbase, Kraken, Bitfinex and others vying for the lead.
In the future, though, the two may be one and the same, at least based on statements made by Nasdaq’s CEO. In an interview for CNBC on Wednesday, Adena Friedman expressed her views on cryptocurrencies and the likelihood of Nasdaq becoming a crypto exchange. She said that Nasdaq is certainly open to the possibility, but that the decision would be made over time. Nasdaq, just like other major Wall Street players, is waiting for the space to mature and become more regulated. However, unlike some institutional investors who are very skeptical about cryptocurrencies (e.g. Warren Buffet), Friedman believes that digital currencies certainly have a future and that Nasdaq will have a role to play in providing a regulated market for the crypto space.
In spite of this expression of cautious optimism and limited interest, Nasdaq is already doing much more than just standing on the sidelines.
Nasdaq & Gemini Partnership
At the same time when Friedman’s interview was published, Gemini, a prominent crypto exchange run by the Winklevoss twins announced a partnership with Nasdaq. Gemini will make use of Nasdaq’s SMARTS Market Surveillance to monitor crypto trading and keep an eye on unusual patterns. The technology will be used to prevent fraud, price manipulation, and other behavior not in line with Gemini’s rules and practices. Apart from monitoring all Bitcoin, Ether, and USD trading pairs, Nasdaq’s SMARTS Market Surveillance will also keep an eye on Bitcoin futures contracts. Commenting on the partnership, Tyler Winklevoss said that this is just one part of an ongoing effort to provide a fair and equal market for everyone who uses Gemini.
Nasdaq Crypto Potential Concerns
Although many have welcomed Nasdaq’s shrewd, guarded approach as institutional money finally accepting cryptocurrencies, others have condemned it as calculating and political, as if Nasdaq is playing it safe, waiting to see how things pan out – without picking sides. It is almost plausible deniability – if cryptocurrencies fail, they won’t get their hands dirty, but if they succeed, they still get to say that they were early supporters.
Once the space is more regulated and ‘mature’, Nasdaq will consider becoming a part of it.
As Neer Varshney of Thenextweb pointed out, while having mainstream giants join the cryptocurrency industry does have the benefit of lending legitimacy, getting people to talk more about it and become more receptive, if a company professes interest only in case all the challenges get solved first, something is simply not right.
At the moment, a crypto exchange run by Nasdaq would certainly reach more traders than any of its competitors, increasing both people’s trust and interest in trading. However, other than that, Nasdaq has very little to offer compared to crypto exchanges that have been servicing the industry from the get-go. It would be a sad world if people decided to leave these exchanges and jump on the bandwagon. As Varshney also pointed out, while it is true that cryptocurrencies may need regulation, they certainly don’t need centralization.
If Nasdaq is really keen on joining, the best time to do it is now, when the space needs big names to help it grow, and not later, when the job’s already done, and all that’s left is to reap the benefits.