Wall Street Struggles With Crypto Custody: Nasdaq’s Decision Sparks Activity -TGN

A decision by the Nasdaq exchange to suspend its plans to launch a crypto custodian service has led other US companies to rethink their planned push into crypto as well.

Following the Nasdaq news, major investment bank Citigroup is now also taking the time to rethink its approach to crypto, with Bloomberg report on Monday that the bank is reviewing its partnership with Swiss crypto custody software provider Metaco.

At the same time, State Street, another major US asset manager, has dropped its deal with London-based crypto custody provider Copper Technologies, Bloomberg said.

Similar to Nasdaq’s decision to move away from crypto, regulatory uncertainty in the US is believed to be a major reason for the companies to move away from the emerging industry.

However, some things are also moving forward in the relationships between traditional finance and crypto-native companies.

In Europe, French banking giant Societe Generale has been licensed by the country’s regulator to offer crypto custody services.

The granting of the license to Societe General earlier this month made it the first entity in France to receive a crypto license, while other companies such as Binance and Bitstamp were merely “registered” and not “licensed,” the French regulator said at the time.

Meanwhile, British asset manager Schroders is looking for a crypto custodian to partner with, Bloomberg previously reported.

According to sources Bloomberg spoke to in June, the company is actively looking for a third-party custodian to support its digital asset expansion, and Zodia Custody Ltd., a company majority owned by British bank Standard Chartered, is said to be one of the shortlisted candidates.

Regulatory crackdown in the US

In the US, regulatory oversight of the crypto sector has intensified, with regulators like the Securities and Exchange Commission (SEC) cracking down on everything from compliance issues to outright scams in the space.

In Europe, however, the EU recently passed the first comprehensive regulatory framework for crypto, the Markets in Crypto-Assets (MiCA) Act.

While it has introduced strict new rules for the crypto sector, the EU’s MiCA rules have received at least some praise from the industry, with companies saying it provides the clarity they need to operate.

“The fine details will matter, but overall we think this is a pragmatic solution to the challenges we collectively face. There are now clear ground rules for crypto exchanges to operate in the EU,” said Binance CEO Changpeng Zhao (CZ) back when the EU parliament approved MiCA.

Similarly, USDC issuer Circle has also expressed its enthusiasm for regulatory developments in the EU, saying earlier this year that it is “doubling down on European expansion”.

He particularly commends EU member France for his efforts to bring regulatory clarity to crypto, Circle CEO Jeremy Allaire said that Circle aims to become one of the first crypto companies to be fully licensed in France.

“France’s comprehensive efforts in innovation-driven crypto regulation are commendable and closely align with Circle’s vision for the future of the digital payments industry,” Allaire said at the time.