Regulatory Uncertainty Casts Shadows on Wall Street’s Crypto Journey

• Digital-asset market grows to trillion-dollar value, intensifying Wall Street’s custody service competition.
• Nasdaq suspends crypto-asset custodian launch, citing regulatory uncertainty.
• Societe Generale obtains a license, while Schroders seeks a crypto custodian.

While the digital-asset market grows to a value over trillion-dollar, Bloomberg reported this afternoon that the competition among Wall Street players vying for custody services is intensifying at a rapid pace. However, a once “sleepy area of finance,” has now apparently transformed into one of the most vibrant sectors. It is currently brimming with activity, meticulously documenting both the positives and the negatives of the sector.

Last week, Nasdaq Inc. made the decision to suspend its crypto-asset custodian launch plans due to a perceived lack of viable business prospects and uncertainty surrounding the regulatory environment. Nasdaq CEO Adena Friedman noted on Wednesday,

Considering the shifting business and regulatory environment in the U.S., we’ve made the decision to halt our launch of the U.S. digital assets custodian business and our related efforts to pursue a relevant license.

According to Bloomberg, Citigroup Inc. is also currently reevaluating its partnership with Metaco Inc., a Swiss digital-asset custodial software provider, which was acquired by another cryptocurrency company. Meanwhile, State Street terminated its deal with Copper Technologies, a London-based firm in the same space.

However,  on a positive note, Societe Generale obtained a license from France’s market regulator, enabling the institution to offer storage and safeguarding services for digital assets. Additionally, UK asset manager Schroders is actively seeking a suitable crypto custodian to partner with.

While these developments reflect the dynamic and ever-changing landscape of the digital-asset custody market, respected crypto developer and co-founder of the Chainlink blockchain network, Sergey Nazarov expressed that a major surge in value for the blockchain industry is expected to occur as big players from Wall Street increasingly embrace blockchain technology.

Furthermore, Nazarov believes that the next critical phase of development will be finding ways to bring together the DeFi-driven public blockchain with the bank-chain world that primarily deals with tokenized real-world assets. By bridging these domains, the blockchain industry is expected to experience significant expansion, opening up vast opportunities for growth and investment. Nazarov shared these insights during the Ethereum Community Conference in Paris, highlighting the promising future of blockchain technology and its potential impact on the financial landscape.