On June 6, Adena Friedman sat down for a 20-minute interview on the evolution of capital markets and the role that cryptocurrencies and blockchain are playing in this. When Joel Weber asked how Nasdaq as a company views cryptocurrencies, Friedman responded by describing the current state of cryptocurrencies as “completely unregulated” and speculative, saying:
“At this point though, I believe that it is very much a speculative asset class… that doesn’t necessarily have a foundational purpose in terms of international commerce.”
Nasdaq Is Taking a ‘Wait and See’ Approach With Cryptocurrencies
Because Friedman views the current state of cryptocurrencies as too speculative, it should be no surprise that Nasdaq is taking a ‘wait and see’ approach when it comes to cryptocurrencies. Friedman referred to this as a “research-oriented approach,” talking about how the company would have to determine where cryptocurrencies fit in with their business and when it should enter the market.
Friedman said that unlike the CME and CBOE, which launched Bitcoin Futures in December 2017, Nasdaq was not interested in becoming a “first mover” in this space. Her comments do seem to indicate that there is a strong likelihood of Nasdaq eventually moving into this market once it becomes more mainstream and regulated. She said:
“I do believe that the construct of a cryptocurrency is something that is starting to become a contract we can understand, that could become part of what I call the financial element of the Internet.”
Of course, just because Nasdaq is not directly involved in cryptocurrencies at the moment doesn’t mean that the company is not happy to earn money from cryptocurrency exchanges. As we reported back in April, Nasdaq is already providing its market surveillance and information technology to Gemini, as well as a couple other exchanges. Friedman noted positively the increasing trend of self-regulation by exchanges and that Nasdaq is more than happy to be a technology provider for them.
Nasdaq Is Already Implementing Blockchain Technology
Friedman was positive about the potential of the underlying blockchain technology in the long term. When Weber asked her how she viewed the role of blockchain considering the lack of real case studies, she quickly corrected him and cited three real-world case studies that Nasdaq is involved in.
The first is a proof of concept for using blockchain technology in mutual fund administration in Norway. The second is the use of blockchain in proxy voting in South Africa, and the third is in OTC security settlement in Switzerland.
Friedman concluded the interview by noting how the immutable aspects of blockchain give it a wide range of potential use cases. The only question is whether the market for such a solution is worth the investment. If it is, Nasdaq is ready to offer its services, with Friedman saying:
“We’ve integrated the blockchain into the Nasdaq financial framework. It’s available throughout every single element of our trade lifecycle and we can deploy it to any client who’s looking for it.”