During Nasdaq’s second-quarter earnings call today, Chief Executive Officer Adena Friedman said the company had halted the launch of its digital asset custody service, which was scheduled to launch in the second quarter. The news appears to be more than a pause, with regulatory uncertainty being the driver. She said it was “possible” that the company could go into business in the future.

In the meantime, it will support potential Bitcoin ETF listings and continue to provide an index solution in the cryptocurrency space.

Last year, Nasdaq announced it was creating a digital asset division, starting with a focus on custody, and developed a proprietary solution. This March it was reported that he applied to the New York Department of Financial Services (NYDFS) for a trust company statute to operate as custodian.

Since Nasdaq already provides several technology solutions related to digital assets, one question is whether it could sell the technology solution instead of the custody service.

Last year, the SEC introduced an accounting rule that requires cryptocurrency custodians to place custodial assets on their balance sheet. That’s not ideal, but it’s a bigger problem for banks that must comply with Basel’s capital rules.

Over the past month, the SEC has sued cryptocurrency exchanges Coinbase and Binance, and there has been summary judgment in the SEC’s lawsuit against Ripple regarding the XRP token. The case had the surprising result that only institutional crypto sales were considered unregistered securities and Nasdaq operates in the institutional space.

Outside of cryptocurrencies, Nasdaq continues to provide technological solutions for tokenization, and recently announced an agreement with the Chilean Central Securities Depository, DCV.

Transcript of CEO’s Digital Asset Remarks

Here’s how Friedman responded to an analyst’s question about whether the custody offer was postponed or shelved.

I try to avoid the word forever. What we choose to do is stop our efforts to implement a custodial solution as a custodian, being a custodian in the US crypto market. The regulatory environment is changing rapidly. At least it’s trying to evolve into something that’s understandable. We’ll see how that works out in the coming months and maybe years.

We like to operate in environments that have fairly well-known regulatory backing. That’s where we feel comfortable. It is consistent with our risk tolerance. It’s consistent with how we know we can succeed. And the regulatory nature of the business has evolved a lot. And the lack of clarity made it so when we looked at the opportunity set of just being a custodian, nothing more, just that segment of the business.

The fundamental business opportunity has changed in recent months and so has the regulatory overload. And that made us decide that the time is not right for us to get into that business.

Will we ever get into that business? It’s possible.

But we would probably do it in connection with other things that we would want to try and do in the digital asset space.

But right now, our focus is to be a great technology provider, to help our clients with their potential for ETF listings, Bitcoin ETF listings. And continue to provide index solutions in the cryptocurrency space.