Reports unveiled that the Nasdaq debuts seven cryptocurrency exchanges but only Gemini and SBI virtual currency comes into the picture. These exchanges are adopting Nasdaq’s market surveillance technology to evade the possible fraud as well as to capture traditional investors.
Nasdaq Deals With 7 Crypto Exchange But Publicized Two
To avoid the deceptive trading or malicious activities, many cryptocurrency exchanges are routing towards the adoption of technology from the traditional stock exchanges. Likewise, Gemini exchange with Nasdaq’s technology and AXX exchange with the London Stock Exchange’s technology is the latest in a row.
Speaking with Forbes representative, Tony Sio, Nasdaq’s head of exchange and regulator surveillance team details the process being used to ‘onboard’ cryptocurrency exchanges. He elaborates the strictness that Nasdaq’s legal and technical team is following to protect investors from the possible risk. He says that any crypto exchange clients must undergo with three categories;
- Business Model
- Exchange Governance and Control
“Historically, we don’t do such a large vetting process for our clients because they are much more well-known. But as we started working with less well-known names, startups, then we realized we needed to do this check process. Said Sio
How Nasdaq on board Crypto Exchanges for Surveillance Service?
As per the interview, the following are the core aspects listed under the models to verify any crypto exchange to employ Nasdaq’s technology.
1) Business Model – Reports highlight the key question from the business model is ‘How reputable are the products available to trade on the venue?’. Here Nasdaq’s team determines the substance of crypto assets to use such as to understand whether it has been used to buy drugs in past.
2) KYC/AML – This model deals with the security mechanism of the organization which highlights the journey of respective crypto platforms from the early days until now. However, the interesting question that interview picked up from this model was ‘“What is the organizational structure and what are the founders’ backgrounds (i.e. tech expertise, financial markets expertise, etc.).
3) Exchange Governance and Control – Lastly, the final model points out the key question which is ‘“Are crypto asset listing standards in place?”
However, it is interesting to note that Nasdaq’s technology ensures to secure its clients from fraud and manipulation. What’s more is that the exchanges which pass the test will be provided with the similar surveillance technology that Nasdaq is using.
Trading Firm Co-Head Disagree
Nevertheless, many crypto enthusiasts took to Twitter, sharing their opinions. While Frank Chaparro, a famous journalists quotes the statement of Nasdaq and appreciates the move, on the other hand, Joe Saluzzi who is the co-head of co-head of trading at New Jersey brokerage firm Themis Trading and author of “Broken Markets” criticized.
“For exchanges who pass the test (and can foot the bill) they’ll be granted access to the same surveillance technology Nasdaq itself uses to ensure its clients that trading volume is as free from fraud and manipulation as possible.”https://t.co/he6JaMqOgO
— Frank Chaparro (@fintechfrank) January 31, 2019
Unlike Bakkt which is powered by the rival New York Stock Exchange in partnership with leading names like Microsoft and Starbucks, Nasdaq is all set for technical support service for cryptocurrency exchanges. Accordingly, Sio says that;
“The objective that we’re trying to work with crypto, is we see this as a growing asset class,” says Sio. “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.”