Nasdaq Digital Assets Foray Could Be Long-Term Plus for Asset Class

The recently completed Ethereum merger hasn’t yet been an upside catalyst, and with another Federal Reserve rate hike on the way, the near-term outlook for digital currencies could be volatile.

Still, some marquee stakeholders and companies see long-term opportunity in digital assets, and that could be a sign that investors don’t want to abandon the asset class too soon. On Tuesday, Nasdaq (Nasdaq: NDAQ) announced the debut of Nasdaq Digital Assets.

That new business could prove well-timed and have positive implications for the broader crypto ecosystem. Additionally, Nasdaq’s well-earned reputation for marrying advanced technology with financial markets could prove advantageous in this arena.

“Nasdaq Digital Assets builds upon the successful solutions we have introduced in recent years to serve the digital assets ecosystem, including marketplace technology for digital asset exchanges, crypto-native anti-financial crime offerings, and crypto-related index solutions for tradable products,” said Adena Friedman, president and chief executive officer, Nasdaq. “The technology that underpins the digital asset ecosystem has the potential to transform markets over the long-term. To deliver on that opportunity, our focus will be to provide institutional-grade solutions that bring greater liquidity, integrity, and transparency to support the evolution.”

While Nasdaq Digital Assets isn’t a company- or product-specific venture, over time it could be relevant for companies residing in exchange traded funds such as the VanEck Digital Assets Mining ETF (DAM) and the VanEck Digital Transformation ETF (DAPP).

“Nasdaq Digital Assets will initially develop an advanced custody solution that will incorporate liquidity and execution services to address industry challenges around connectivity, availability, and efficiency. Nasdaq’s custody solution will bring together the best attributes of hot and cold crypto wallets through an innovative technology offering, which will provide a high degree of accessibility and scalability without compromising security. Nasdaq’s offering is subject to regulatory approval in applicable jurisdictions,” according to the exchange operator.

Potentially adding to the case for assets such as DAM and DAPP with regard to the Nasdaq Digital Assets news is that the new business suggests that interest in digital assets among high-level investors remains strong despite bitcoin’s 2022 slump.

“Demand among institutional investors for engaging in digital assets has increased in recent years, and Nasdaq is well-positioned to accelerate broader adoption and drive sustainable growth,” said Tal Cohen, executive vice president and head of North American markets, Nasdaq. “With our trusted brand and strong track record as a technology provider for the global capital markets, Nasdaq is uniquely placed to address industry pain points by improving liquidity, scalability, and resiliency, with the goal to engender greater trust and confidence in the digital assets ecosystem.”

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.