fbpx
ForexFraud Header

Nasdaq announces partnerships with cryptocurrency exchanges

Published:
Updated:

Nasdaq buildingThe firm behind a major American stock exchange has announced that it is working with seven cryptocurrency exchanges with its crypto security offer.

Nasdaq, which runs the famous stock exchange of the same name which regularly dominates investment market headlines, says that seven cryptocurrency exchanges now use some form of its proprietary surveillance software.

 

The reason for the relatively low figure has been attributed to the complex security methods which Nasdaq has instituted in order to weed out those it doesn’t want on board.

Not all firms who apply get approved to use the software – and Nasdaq makes sure that those who do are vetted closely.

According to a piece in Forbes magazine, potential applicants are screened by a team of around 20 Nasdaq employees. Among other things, this team is looking for technological capacity to use the kit well in addition to any potentially fraudulent history.

It is understood that the firm goes through a complex series of questioning processes for potential users, with each set of questions falling into three categories: business model, KYC/AML, and exchange governance and controls.

The first two categories appear to be focused on ensuring that Nasdaq has as much information as possible about its clients to hand.

KYC/AML, which stands for know-your-customer/anti-money laundering, attempts to find out information about the professional history of founders.

The third category of question focuses on how well run the exchange appears to be, such as what the asset listing policy there is.

So far, only two of the seven crypto exchanges which have been approved have been named publicly. One of them is Gemini, which is run by the twins Tyler and Cameron Winklevoss.

Gemini is believed to use the Nasdaq “SMARTS” system to help ensure that Gemini is what its founders describe as “a rules-based marketplace”.

The other is SBI Virtual Currency, which is owned by established Japanese company SBI Holdings. This exchange uses a different Nasdaq surveillance product, known as a matching system.

During a press conference, Nasdaq’s head of exchange and regulator surveillance, Tony Sio, spoke about the hoops that each crypto exchange which applied had to jump through before they could be approved to join.

He said that this was down in part to the size and the maturity of the companies they were now working with.

“Historically, we don’t do such a large vetting process for our clients because they are much more well-known”, he said.

“But as we started working with less well-known names, startups, then we realized we needed to do this check process.”

Sio also said, however, that he wanted Nasdaq to help these smaller organisations as they began to evolve into larger ones.

“The objective that we’re trying to work with crypto, is we see this as a growing asset class”, he said.

“So we’re working to help provide our technology – it could be around matching, it could be around surveillance – to help our customers as they grow their marketplaces.”