Nasdaq to offer custodial service for bitcoin

Nasdaq, an American company that owns the second largest stock exchange in the world, is preparing to launch a bitcoin custody service for institutional investors. The company has been active in the Bitcoin sector for some time, but with this move it wants to do more than just facilitate trading.

Storing large amounts of bitcoin remains a difficult decision. If you do it yourself, you put a lot of pressure and responsibility on your own shoulders. If you have it done by a specialized custody company, this will entail costs and you will have a counterparty risk. In addition, you are in a sense moving away from the way bitcoin is intended for.

Institutional investors, parties that invest large sums of money, often choose the latter option. Not only because this regulation is technically enforced, but also because it is more accessible and requires little technical knowledge.

With Nasdaq’s move to offer an institutional custody service for bitcoin, the company will compete with custodians such as Anchorage, Bakkt, BitGo, Coinbase Custody, Fidelity Digital Assets, Fireblocks, Gemini Custody, Ledger Vault and Kingdom Trust. It seems to be a fairly saturated market and it may therefore be quite a job for Nasdaq to distinguish itself from these parties.

Institutional adoption?

Earlier this year, Fidelity announced that retirement investors could add bitcoin to their 401k retirement plan.

Recently, the world’s largest asset manager BlackRock (with $10 trillion under management) announced that investors can buy bitcoin directly via its own platform (Aladdin). The asset manager has also set up its own Bitcoin fund for institutional investors. Furthermore, we were recently told that large Wall Street companies, including Citadel, want to create an exchange for both retail and institutional investors.

Taking into account the above news, Nasdaq, which is going to offer an institutional custody service for bitcoin, shows a development that major parties are interfering with the Bitcoin sector. Nasdaq is still awaiting formal approval to launch the custodial service, but it seems only a matter of time.

Read more about the risks of storing bitcoins on an exchange here.

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