In an unexpected decision, Nasdaq Inc is halting plans to roll out a crypto custody offering due to the US’s rapidly-changing business and regulatory crypto landscape, the leading stock exchange operator announced in an earnings call. While Nasdaq said it wants to continue developing its digital assets solutions, the move could mark a potential setback for institutional crypto adoption.

Nasdaq Says it Will Not Abandon Digital Assets

The stock exchange operator announced it is backing down on its efforts to launch a crypto custody service, citing the ongoing regulatory risks in the US. The initial plan was to launch the solution by the end of Q2 2023.

“This quarter, considering the shifting business and regulatory environment in the United States, we have made the decision to halt our launch of the U.S. digital assets custodian business and our related efforts to pursue relevant license.”

– Nasdaq CEO Adena Friedman stated.

The move comes just a few months after the stock exchange operator said it was working to build the infrastructure and obtain the regulatory approval needed for rolling out a crypto custody offering. To achieve this, the group filed with the New York Department of Financial Services (NYDFS) to launch a limited-purpose trust company to manage the custody business.

Now, Nasdaq is making a U-turn due to “the shifting business and regulatory environment in the U.S.,” Friedman said. However, the CEO stressed that the company will continue developing its digital asset operations, including its “custody solution as a technology platform to serve the broader, global digital assets marketplace.”

Nasdaq’s Move Weighs on Institutional Crypto Adoption

Despite the late reversal, Friedman said Nasdaq intends to continue the digital asset industry in multiple ways, including partnerships with potential exchange-traded fund (ETF) issuers.

Last month, cryptocurrencies staged an impressive rally after BlackRock, the world’s largest asset manager, filed an application to launch a spot Bitcoin ETF. In a matter of days, several other leading traditional finance institutions followed suit, boosting crypto investors’ sentiment on hopes of institutional crypto adoption.

However, Nasdaq’s U-turn still represents a blow to mainstream acceptance of crypto in the US, where regulators continue to crack down on the industry and the related service providers. As a result, there are concerns that further regulatory heat could prompt an exodus of crypto firms from the US market to more favorable jurisdictions.

This article originally appeared on The Tokenist

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