There has been a lot of talk by several mainstream financial entities in the past two years that they could be considering launching different cryptocurrency products. While some, such as the CME Group and CBOE exchanges, have already taken the step, many others are still trying to get the ball rolling. One, the NASDAQ exchange, has had plans in the works for a while and has now confirmed that it hopes to launch its platform beginning sometime early next year and that it will start with Bitcoin Core (BTC) futures.
In a recent interview with news outlet The Express in the UK, NASDAQ VP of Communications Joseph Christinat reiterated the company’s position that it is still moving forward, despite the current market slump. He said that there’s been “more than enough work dedicated into the endeavor to make remove the question of regulatory approval. We will do this, and it is definitely happening.” Christinat added that the biggest challenge now is to receive approval by the U.S. Commodity Futures Trading Commission (CFTC).
NASDAQ, the world’s second largest stock exchange, has been developing its crypto portfolio for the past several years. It had hoped to launch one or more products this past summer, but revealed that it would postpone the launch in order to develop a platform that would be “unique enough” to attract a large following.
Christinat added, “We have put in plenty of financial resources and energy into delivering the capability to make this operational, and we’ve been on it for quite some time. Long before the market turbulence. The current atmosphere won’t affect our timeline in any way. We are going to do this no matter what comes.”
NASDAQ is joined by companies such as Fidelity Investments and the Intercontinental Exchange (ICE) that are preparing to introduce cryptocurrency trading products. Fidelity has said that it is still on target for a December launch for its offerings, while ICE, which is developing the Bakkt platform, has had to delay its launch from December to next January at the earliest.
What is still not known is how the BTC futures will operate. When CME and CBOE introduced their futures products last year, they were offered as cash-backed futures. Bakkt has said that it anticipates being the first to offer futures that are physically settled and would more than likely maintain those bragging rights even if NASDAQ decided to go the same route.
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Stock exchange firm Nasdaq will reportedly continue with plans that will see them launch BTC futures in 2019 despite the ongoing price slide, according to sources close to the company.
The decision puts Nasdaq at odds with the trajectory of crypto markets, which have continued to wane throughout 2018 as investors increasingly flee the legacy cryptocurrency in favour of more sophisticated alternatives.
Nasdaq has reportedly been working closely with U.S. regulators on the plans, namely the Commodity Futures Trading Commission (CFTC), to bring BTC futures on stream by early 2019, according to Bloomberg.
BTC futures were first introduced in December 2017, launching on exchanges Cboe Global Markets and CME Group. Shortly thereafter, prices began their slide from highs of near $20,000 down to their current level, under $4,000.
After the launch of futures contracts on these exchanges, the CFTC introduced tighter guidelines for listing derivatives based on digital assets, building on the self-certification process used by Cboe and CME at launch.
Back in January, Nasdaq CEO Adena Friedman said the firm was contemplating ways of making its futures distinct from those available at other exchanges.
According to sources familiar with the plans, the Nasdaq futures will use prices from a number of spot exchanges, versus the handful used for pricing instruments on Cboe and CME respectively.
The spot prices will be compiled by VanEck Associates, a firm which has been seeking approval separately from the U.S. Securities and Exchange Commission for an ETF that will track a selection of cryptocurrencies.
The move coincides with similar plans from rival New York Stock Exchange, which is slated to launch its own futures contracts on Jan 24.
With the BTC collapse effectively wiping out the gains made over much of 2017, it remains to be seen whether the demand still exists for BTC futures, and whether these new instruments will hasten the decline of BTC prices as the token continues its descent into obsolescence.
Neither representatives from Nasdaq or VanEck, nor the CFTC, were available for comment on the matter.
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Microsoft, through its Azure cloud computing service, will be collaborating with stock exchange company Nasdaq to provide clients with better payment mechanisms.
Microsoft Azure General Manager Matthew Kerner announced the partnership in a blog post, saying that “Azure will deliver highly secure interoperation and communication between the Nasdaq Financial Framework [NFF] core infrastructure, ecosystem middleware and customer technologies, using an innovative blockchain microservices suite to execute transactions and contracts.”
Nasdaq Senior Vice-President of Enterprise Architecture Tom Fay was quoted as saying, “[A]s more industries move towards capital markets technology and structures, we see the potential for blockchain to provide value in secure, frictionless and instantaneous matching of buyers and sellers.”
Kerner said that capital market organizations using applications based on the NFF platform will be able to do so “without the need for ledger-specific skills or knowledge, which is critical as the industry pursues new use cases for distributed ledger technology.”
Fay added, “Delegating to Microsoft—as a best of breed enterprise-quality partner and leader in the blockchain space—to handle all of the semantics of ledger communication, security, deployment and orchestration, allows us to focus on customer challenges and solutions at scale, rather than expending resources on building components that fall outside our core business.”
Kerner noted that it was Nasdaq that first offered the first-ever electronic stock exchange, back in 1971.
Nasdaq has reportedly been exploring a platform for the offering of security tokens, and is in talks with several blockchain firms on the matter. As further evidence of its commitment to blockchain ventures, the company has applied and been granted a patent for the providing of news through the technology, with each news item being recorded and scheduled for release at specific times.
Microsoft has partnered with professional service firm Ernst & Young in using blockchain to manage royalties and content rights. The platform will provide users with real-time access to data pertaining to the content they supply, built on the Quorum blockchain protocol and using Microsoft Azure cloud technology.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Nasdaq has been granted a new patent for a newswire service powered by the blockchain, leveraging the benefits of distributed ledger technology to release news in a securely, timely fashion.
The company, which runs stock exchanges in the United States and elsewhere, filed its patent with the U.S. Patent and Trademark Office, in the latest charge from a mainstream financial company towards blockchain technology.
In the filing, Nasdaq demonstrates a system that handles timed release of embargoed news to selected distribution outlets, in a secure, efficient way that leverages the specific advantages of blockchain technology.
Noting that there are other technologies performing a similar function at the moment, the patent filing said that the newswire platform would ensure no audit trail gaps, through recording each news release within the blockchain.
The system allows for news to be distributed with specific embargo times and dates, as well as ensuring data around each release is written to the blockchain.
With the help of smart contracts, it will also be possible to integrate new workflow and security features automatically, improving the efficiency news distribution.
The patent documentation describes the need for “new and improved techniques and systems for delivering and securing such time-sensitive information,” which it says “are continually sought after” by newswire and distribution services.
Information can be shared through the newswire to specific parties automatically when the news reaches its embargo deadline, with multi-sig requirements for security and verification.
“Access to the sensitive information that is stored on the blockchain may include a multi-signature requirement that is part of the embedded scripts that make up a given blockchain transaction,” according to the patent. “The intended recipients of the information may then directly interface with the blockchain at the scheduled time … to access information that has been securely stored.”
In particular, the platform promises to offer a more robust audit trail, avoiding the gaps or lack of auditing-friendly facilities within existing systems - another feature provided for by the blockchain solution.
The Nasdaq patent is the latest blockchain IP secured by the firm, at a time of increasing development activity in blockchain from the world of mainstream finance.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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This past June, NASDAQ CEO Adena Friedman warned about the issues associated with initial coin offerings (ICO). She was referring to the inherent risks associated with the offerings, which have not been forced to adhere to any set regulations. However, the exchange might be prepared to support a different type of ICO, one that is regulated by financial authorities.
According to a report in The Block, the exchange is considering introducing a platform that will allow firms to offer security token offerings (STO). An STO is similar to an ICO, but differs in that all STOs are regulated by authorities. STOs must be registered with the Securities and Exchange Commission (SEC) in the US and are considered tradable assets issued against future profits.
An unidentified source told The Block that the exchange has been in touch with blockchain and cryptocurrency firms, such as the blockchain startup Symbiont, to implement the platform. Through the platform, NASDAQ would issue tokenized securities and offer an STO trading solution.
NASDAQ isn’t the first entity to consider getting into the STO side of the equation. CoinList, which provides STO services to FinTech companies, and Overstock’s tZero are already involved, and angel investment portal AngelList also has an arm dedicated to STOs.
With Friedman at the helm, NASDAQ has been more open than most toward cryptocurrencies. She told CNBC this past April, “Certainly Nasdaq would consider becoming a crypto exchange over time. If we do look at it and say ‘it’s time, people are ready for a more regulated market,’ for something that provides a fair experience for investors.”
At the end of July, the exchange reportedly held meetings in Chicago with several cryptocurrency exchanges. The meeting was allegedly designed to study how to advance cryptocurrency industry and increase awareness on a global scale.
NASDAQ is also reportedly looking to add additional support to its Analytics Hub, a platform that offers information on the buy side of trades and which includes data that is used by investors to make trading decisions. The new tools to be added to Analytics Hub would be designed specifically for the cryptocurrency market.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Nasdaq is set to acquire Sweden-based trading solutions provider Cinnober, in a deal that could see the stock exchange move into helping institutional investors gain access to new opportunities around cryptocurrency.
The move, announced last week, involves a $190 million all cash recommended public offer to Cinnober shareholders and warrant holders from Nasdaq. It plans to fund the acquisition with cash on hand or liquidity available under existing credit facilities.
It comes as the latest indication of Nasdaq’s growing interest in cryptocurrency trading and related services. Following the U.S. Securities and Exchange Commission’s (SEC) rejection of the latest Winklevoss crypto exchange traded fund (ETF) proposals, Nasdaq reportedly met with a panel of cryptocurrency experts to discuss ways of legitimising the sector, and of finding ways to placate the requirements of the SEC.
The acquisition will see Nasdaq take control of Cinnober, a firm with a reputation for bullishness around digital assets. Cinnober’s strategic partnership with cryptocurrency custodian BitGo also looks to be of interest to Nasdaq, for its appeal to institutional investors.
Custodianship has become an increasingly prominent issue amongst institutional investors, who are wary of deploying capital without solid security and custodial services in place.
With recent high profile hacks, including the Bancor exchange attack in June, some analysts have suggested these fears might be well placed. With its cryptocurrency custody service ready to go for institutional investors, the Cinnober acquisition therefore eliminates this barrier to market for Nasdaq in attracting institutional clients to invest in digital assets.
Nasdaq CEO and President Adena Friedman said the acquisition would allow the group to capitalise on new opportunities around cryptocurrencies and other digital assets.
“The combined intellectual capital, technology competence and capabilities of Cinnober and our Market Technology business will expand the breadth and depth of our fastest growing division at Nasdaq,” Friedman said in a statement. “This acquisition will enhance our ability to serve market infrastructure operators worldwide, and will accelerate our ability to expand into new growth segments.”
The acquisition comes at a time when large financial institutions are increasingly developing their custody services, with Bank of America and Citigroup announcing similar plans in recent months. Purchasing Cinnober will likely help position Nasdaq in this market, as well as marking their progress towards offering a more comprehensive lineup of crypto services.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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