Editor’s Note 18/Sep 07:55 a.m: The article has been amended to clarify that Cinnober is a trading solution provider to marketplaces and clearinghouses, not an exchange itself as suggested previously. The article also previously stated that BitGo had acquired a digital asset custodian; the company later announced that it had decided not to complete the acquisition.
Nasdaq, the world’s second-largest stock exchange, announced Friday that it is in the works to acquire Cinnober, a trading solution provider based in Sweden.
Cinnober has a history for bullishness towards digital assets and making it easier for institutions to invest in them. One of those efforts is the partnership with BitGo, a behemoth for institutional-grade cryptocurrency custody security.
Nasdaq’s latest acquisition highlights, though indirectly in this case, its continued interest in the cryptocurrency sector. As CCN.com reported, on the heels of the SEC’s second rejection for the Winklevoss twins’ ETF, the Nasdaq held a closed-door meeting with cryptocurrency industry experts. In the meeting, participants discussed ways to validate cryptocurrencies as a traditional securities product, especially in ways to appease the fickle SEC.
The acquisition will see Cinnober move under Nasdaq’s Market Technology headquarters in Stockholm, Sweden.
Cinnober partner BitGo’s multi-signature security and custody solutions have made it one of the most popular offerings in the space. Nasdaq’s release points to their interest in Cinnober’s success in offering newer asset types. Adena Friedman, President and CEO, Nasdaq, said:
“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. Not only have the global capital markets continued to evolve rapidly, new marketplaces in various industries are demanding market technology infrastructure that enables rapid growth and scale as well as access to tools to promote market integrity. This acquisition will enhance our ability to serve market infrastructure operators worldwide, and will accelerate our ability to expand into new growth segments.”
Household names in finance are racing to developer regulated and clearly audited custodian solutions, including Citigroup and Bank of America.
Large institutions’ concerns over custody are understandable, given the number of exchanges hacked in Bitcoin’s history. The Bancor exchange hack is the most recent large example, as CCN.com reported on in July. Many cryptocurrency experts believe that the custodian problem has been solved, especially with multi-signature technology and cold storage.
While the technology is there, legitimacy can only be improved when large names like Nasdaq can provide tangible audits that traditional securities managers are accustomed to. The acquisition comes during the race to provide the first (and best) publicly trading cryptocurrency vehicle (and thus the servicing fees that translate to more profits.)
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