In the face of persistent high inflation in the U.S., the Federal Reserve has accelerated its interest rate hikes, plunging cryptocurrencies—previously buoyed by excess dollar liquidity—into a prolonged bear market.
Following last week's Fed rate hike announcement, Bitcoin once again fell below the $20,000 threshold, marking a staggering 60% decline year-to-date. Yet, this hasn't deterred major financial institutions from stepping into the cryptocurrency arena.
Nasdaq and Fidelity Enter the Crypto Space
In September, two heavyweight players—Nasdaq and Fidelity—launched cryptocurrency-related services:
- Nasdaq plans to introduce crypto custody services for institutional clients.
- Fidelity will offer Bitcoin trading to retail investors.
Nasdaq’s Strategic Move into Crypto Custody
According to external reports, Nasdaq is making its first major foray into cryptocurrencies by capitalizing on growing institutional demand. Internal sources reveal that the exchange has been planning an institutional-grade crypto custody solution.
With decades of experience in global equity markets, Nasdaq is no stranger to crypto. Since 2018, it has provided market surveillance technology to crypto exchanges. In February 2021, it launched the Hashdex Nasdaq Crypto Index ETF.
Key developments:
- Newly appointed Nasdaq Digital Assets head Ira Auerbach (formerly of Gemini) will lead the division, aiming to grow the team to 40 by year-end.
- Initial offerings include Bitcoin and Ethereum custody for institutions.
- The custody service positions Nasdaq against crypto-native firms like Coinbase and traditional players like BNY Mellon.
"Custody is the foundation for any other service we build," Auerbach stated, emphasizing Nasdaq’s institutional expertise as a key differentiator.
Nasdaq awaits approval from New York regulators, reflecting cautious yet strategic expansion.
Fidelity’s Bitcoin Push for Retail Investors
Meanwhile, Fidelity Investments—the world’s largest asset manager—is broadening its crypto services:
- Exploring Bitcoin trading for retail clients via its brokerage platform.
- Since 2018, Fidelity has offered institutional Bitcoin trading; in April 2022, it enabled Bitcoin allocations in 401(k) plans.
- Launched crypto and metaverse-focused ETFs and applied for a Bitcoin ETF with the SEC.
Fidelity began mining Bitcoin in 2014 and introduced institutional custody in 2018. As younger investors drive crypto adoption, traditional firms are adapting to meet demand.
FAQs
Q1: Why are traditional firms like Nasdaq entering crypto now?
A1: Rising institutional interest and the need for regulated, secure custody solutions are driving legacy players into the space.
Q2: How does Fidelity’s Bitcoin 401(k) plan work?
A2: Employees can allocate up to 20% of their retirement savings to Bitcoin through Fidelity’s platform.
Q3: Will Nasdaq compete with Coinbase?
A3: Yes, but Nasdaq targets institutions seeking familiarity with traditional finance infrastructure.
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This article synthesizes reporting from Jiemian News, originally authored by Si Linwei and licensed by 36Kr.
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