Nasdaq to apply cryptocurrency technology for carbon market expansion

Nasdaq is poised to leverage the technological advancements developed for its cryptocurrency initiative to make inroads into burgeoning markets. The prominent stock exchange operator, having recently abandoned plans for a digital asset custodian business in the United States, is now aiming to utilize its technology to attract clients keen on diverse assets, including carbon.

Tal Cohen, Nasdaq’s co-president, unveiled the company’s determination to proceed with the technology launch in an interview with Bloomberg Television. Instead of pursuing a custodian business, Nasdaq plans to introduce an institutional-grade end-to-end technology platform. This platform is envisioned not only to support digital assets but also to power markets such as the carbon market.

While regulatory measures are attempting to distance the U.S. financial system from cryptocurrencies, Nasdaq and other mainstream financial entities are adapting their digital asset strategies. Despite halting plans for a related business license, Nasdaq remains committed to developing technology that supports crypto-related services for its clients.

As U.K. startups increasingly opt to debut on public markets in New York over London, U.S. exchange operators, including Nasdaq, have reaped significant benefits. Cohen expressed Nasdaq’s eagerness to collaborate with lawmakers, seeking to enhance the region’s appeal as a preferred destination for such listings.

Highlighting challenges in Europe, Cohen mentioned tax regimes, cumbersome regulations, and complexity as structural obstacles hindering growth. Nasdaq, with a significant presence in Europe, signaled its willingness to engage in discussions with European authorities to explore avenues for assistance and collaboration.

Nasdaq said in July that it was abandoning plans for a cryptocurrency custody service due to the evolving business and regulatory landscapes in the United States. Despite this decision, Nasdaq CEO Adena Friedman emphasized the ongoing commitment to providing technology capabilities, positioning Nasdaq as a leading digital asset software solutions provider globally.

Friedman acknowledged the significant effort put into establishing the necessary infrastructure and gaining regulatory approval for the custody service. Even though Nasdaq had applied to the New York Department of Financial Services (NYDFS) for a limited-purpose trust company to oversee the custody business, the decision was made in response to the dynamic regulatory environment.

The CEO underscored Nasdaq’s dedication to engaging with crypto companies and partnering with potential exchange-traded fund (ETF) issuers. Emphasizing a broader commitment to supporting the digital asset ecosystem, Friedman highlighted ongoing engagement with regulators and the delivery of comprehensive technology solutions across the trade life cycle. Additionally, Nasdaq aims to foster partnerships with ETF issuers to facilitate tradable exchange-listed products.