'Nasdaq Would Consider Becoming a Crypto Exchange', Says CEO

  • Nasdaq CEO says that Nasdaq will consider becoming a crypto exchange once the regulatory framework becomes more clear.
  • Nasdaq is already working with the Gemini crypto exchange to help it with detection of fraudulent trading activity.

In an interview on CNBC yesterday, Adena Friedman, the President and CEO of the world's second-largest exchange (by market capitalization), revealed that "Nasdaq would consider becoming a crypto exchange over time."

Although she stressed that a clear regulatory framework would need to be put in place first, she generally presented a bullish stance on cryptocurrencies:

I believe that digital currencies will continue to persist it's just a matter of how long it will take for that space to mature... Once you look at it and say, 'do we want to provide a regulated market for this?' Certainly Nasdaq would consider it.

Adena Friedman, Nasdaq CEO

This news came on the same day that Gemini Trust -- the digital asset exchange started by the Winklevoss twins in 2015 -- and Nasdaq made the announcement in a press release that Gemini was going to use Nasdaq's market surveillance service for monitoring bitcoin and ether trading as well as the auction process Gemini uses for determining the settlement  price for Bitcoin futures:

Gemini Trust Company, LLC (Gemini) and Nasdaq Inc. (Nasdaq:NDAQ) announced today that Gemini will be leveraging Nasdaq's SMARTS Market Surveillance technology to monitor its marketplace. The technology, which is considered the most widely deployed surveillance system in the world, will enable Gemini to monitor across all of its trading pairs, including: BTC/USD, ETH/USD and BTC/ETH. Further, SMARTS will also surveil activity across the Gemini auction process that is used to determine the settlement price for the Bitcoin XBT futures contracts that trade on Cboe's CFE Exchange.

Nasdaq

Friedman then presented her thoughts on ICOs: "ICOs need to be regulated... The SEC is right that those are securities and need to be regulated as such." We must remember that Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), had this to say about ICOs on 6 February 2018 in a Senate hearing on cryptocurrencies:

And I'm very unhappy that people are conducting ICOs like public offerings of stock when they should know that they should be following the private placement rules unless they're registering with us.

Jay Clayton, SEC Chairman

As for blockchain technology in general, Friedman is on the record as saying that the blockchain is "a foundational technology that we see as really having the great promise to create a lot more efficiency in global trade." Over the past few months, Nasdaq has been working with several firms offering blockchain-based exchange-traded funds (ETFs). On 17 January 2018, the first two such ETFs were launched on Nasdaq. These were the Amplify Transformational Data Sharing ETF (BLOK) from Amplify ETFs and Reality Shares Nasdaq NextGen Economy ETF (BLCN) from Reality Shares

And finally, it is worth noting that Nasdaq is currently exploring the idea of launching a Bitcoin futures contract to compete with Cboe Global Markets and CME Group, which introduced Bitcoin futures trading last year. On 23 January 2018, while discussing bitcoin at the World Economic Forum in Davos, Switzerland, the Nasdaq CEO, in an interview with Maria Bartiromo on FOX Business, made the following comments:

We are in the mode of exploring that... We want to make sure that if we choose to enter the market in terms of providing a future in the market that... we have client demand... and that we put the right management protocols in place to make it so that people feel confidence in what we are providing, and how that becomes an investable product.

Adena Friedman, Nasdaq CEO

 

U.S. SEC Needs More Time to Consider VanEck Bitcoin ETF Proposal, Invites Comments

The U.S. Securities and Exchange Commission (SEC) announced on Monday (May 20) that it needed more time to consider the VanEck–SolidX Bitcoin ETF proposal. This delay also gives interested parties more time to comment on the proposal and address the SEC's main concerns. 

On 30 January 2019, Cboe BZX Exchange ("BZX") filed with the SEC a proposed rule change to list/trade shares of "SolidX Bitcoin Shares", which would be issued by the VanEck SolidX Bitcoin Trust. This proposed rule change was published in the Federal Register on 20 February 2019. It then had 45 days to approve, disapprove, or ask for a delay.

(Note, however, that BZX had filed its original proposal back in June 2018; the SEC delayed a decision on this proposal several times, and February 27 was the final deadline for the SEC to make a decision. However, due to the U.S. government shutdown that occurred in December 2018 and ended in January 2019, the SEC was partially out of action during this period. By the time that the SEC fully operational again, there was only a few weeks left till the final deadline. So, to give this Bitcoin ETF proposal the best chance of success, on 22 January 2019, BZX withdrew its original proposal, and re-applied (in order to reset the clock) on 30 January 2019.)

Anyway, on 29 March 2019, the SEC released a notice to say that it had selected 21 May 2019 as the date by which it should approve, disapprove, or ask for a further delay to consider the grounds for disapproving the Bitcoin ETF proposal. Why 21 May 2019? Because 90 days is the maximum amount of time it could ask for, and 21 May 2019 is 90 days from 20 February 2019, which was the date that the proposal got published in the Federal Register.  

Well, yesterday (i.e. just one day before the expiry of the 90-day deadline), the SEC decided to delay making a decision, and this time it had to provide "notice of the grounds for disapproval under consideration" (i.e. explain why it thinks that it might deny the proposal).

Here are a few of the SEC's concerns, and it is inviting the ETF's sponsor, i.e. BZX, and other interested parties to provide written comments (in either electronic or paper form):

  • Has BZX "entered into a surveillance-sharing agreement with a regulated market of significant size related to bitcoin?"
  • What is the relationship between the Bitcoin futures market and the Bitcoin spot market?
  • The proposed Bitcoin ETF uses "a non-public, proprietary index to value holdings based on OTC activity", but is this really "an appropriate means to calculate the NAV of an exchange-traded product"?
  • BZX has said in its proposal that it "has entered into a comprehensive surveillance sharing agreement with the Gemini Exchange and is working to establish similar agreements with other bitcoin venues." But is the Gemini digital asset exchange "a regulated market of significant size"?

Any arguments regarding whether the proposal should be approved or disapproved need to be submitted within 21 days of publication in the Federal Register of yesterday's order (Release No. 34-85896; File No. SR-CboeBZX-2019-004), and anyone who wants to "file a rebuttal to any other person’s submission" must do so no later than within 35 days of the date of publication in the Federal Register.

The following tweets were sent out on May 19, i.e. the day before the SEC made this latest announcement, by Crypto Twitter's favorite U.S. attorney, Jake Chervinsky:

According to Chervinsky, "VanEck's new deadline is August 19," and the "SEC can & likely will delay one more time for a final deadline of October 18."

This is how Gabor Gurbacs, Director of Digital Assets Strategy at VanEck/MVIS, expressed his personal thoughts on the SEC's ultra cautious attitude towards Bitcoin ETFs:

The SEC choosing to delay making a decision on the VanEck Bitcoin ETF proposal did not come as a surprise to the crypto markets, which reacted very calmly (Bitcoin's price only went down slightly), and in fact, at press time (11:00 UTC on May 21), according to data from CryptoCompare, Bitcoin is trading at $7,945, up 0.33% in the past 24-hour period:

BTC - 24 Hour CC Chart - 21 May 2019.png