Recently, Blockonomi covered a story on the Nasdaq Recently, it has been noted that some of the leading figures in the trading space were hesitant to pin their hopes on bitcoin. Now, Nasdaq has confirmed its involvement with roughly seven cryptocurrency trading platforms.
At the time of writing, only two of these seven have been named: Gemini In New York and SBI Virtual Currency; the latter began its association with Nasdaq in June of the previous year, while the former teamed up with Nasdaq starting in April. At that point, Cameron and Tyler Winklevoss the exchange’s founders released the following statement:
“By deploying Nasdaq’s SMARTS Market Surveillance, we are committed to providing a rule-driven trading environment for all our participants.”
How It All Works
Nasdaq has a dedicated team of nearly 20 professionals who thoroughly vet prospective crypto exchanges. They undergo a comprehensive due diligence process, ensuring that these exchanges maintain integrity and employ superior security measures. Those failing to meet these standards are promptly dismissed.
When a company fulfills Nasdaq’s stringent requirements, they gain access to the sophisticated surveillance tools (SMART) employed by Nasdaq to verify trading clients’ identities and ensure compliance.
Tony Sio, the head of exchange and regulator surveillance at Nasdaq, remarked:
“Conventionally, we didn’t have extensive vetting for our regular clients due to their familiarity, but when engaging with newer, less recognized entities like startups, the necessity for this thorough validation became evident. Our aim with the crypto ecosystem is to support its evolution as an asset class by offering our technological expertise – targeting aspects such as matching and surveillance – to aid in the growth of their marketplaces.”
The Process For Which It’s Done
Sio further elucidated the precise strategy Nasdaq implements when evaluating cryptocurrency exchanges. Platforms are assessed based on three criteria: Business Model, Know-Your-Customer (KYC)/Anti-Money Laundering (AML), and Exchange and Governance Controls. Representatives then analyze the performance of each platform in these areas to ascertain their partnership viability.
A key focus during the Business Model assessment is the evaluation of a crypto company’s product offerings. Executives look into the tradability and accessibility of these products across various platforms, as well as their utilization.
Moving onto the KYC/AML In the governance category, examiners scrutinize the company’s organizational structure and investigate the founders' backgrounds. They consider previous workplaces, technological expertise, and educational history, posing crucial questions during this phase.
We Understand Why This Is Done
Overall, this approach is logical. The crypto world has demonstrated its vulnerability, from cyber-attacks to persistent volatility, revealing its struggle to shield itself from threatening elements. Mt. Gox , Coincheck , Bithumb , the potential risks are manifold, and Nasdaq remains cautious about engaging with exchanges that might jeopardize customer assets overnight.
While it is a daunting reality that has been repeatedly proven, without careful management, such incidents might recur.
The last segment ensures proper protocols for asset listings are in place. Certain exchanges, like Coinbase in the U.S., offer transparent updates to the public whenever new crypto assets are introduced, while others may not. Every platform must devise a clear system to inform users about impending asset availability.
