Cryptocurrency exchanges desiring to use Nasdaq’s proprietary surveillance technology should have more than money. A group of around 20 individuals confers to an expound due-diligence process went for guaranteeing that any trade that needs to utilize the technology to examine fraudulent transaction patterns is actually proficient and ethically inclined to utilize the ground-breaking software wisely.
Cryptocurrency exchanges that pass through the test will be given access to a similar surveillance technology that Nasdaq uses in order to verify its clients that the trading volume is free from any hoax and manipulation as much as possible.
According to the reports, so far, seven cryptocurrency exchanges have passed Nasdaq’s muster, out of which name of only two Virtual Currency and Gemini were mentioned. Since cryptocurrency exchanges try their best to attract new customers, Nasdaq’s technology is being used to lure traders and institutions habitual of mainly conventional venues.
Tony Sio, Nasdaq’s head of exchange and regulator surveillance talked about all the queries that every cryptocurrency exchange must answer, amid a meeting on the state of the business with individuals from media today at Nasdaq’s workplace.
Sio said that “Historically, we don’t do such a large vetting process for our clients because they are much more well-known”. To this, he added, “But as we started working with less well-known names, startups, then we realized we needed to do this check process”.
Sio even showed a comprehensive overview of how the company vets its crypto exchange clients, separated into 3 classes: Business Model, KYC/AML, and Exchange Governance and Controls.
Following the rundown, Sio answered to some other queries and clarified that how Nasdaq’s group of legitimate and specialized specialists utilize the criteria and others to assess conceivable clients for hazard. He added that not everyone makes the cut.
The document’s primary segment, “Key Questions to Ask When Evaluating a Cryptocurrency Exchange” was known as “Business Model”. From the very segment, one question aroused that “How reputable are the products available to trade on the venue?”
The interesting element about the whole things is that it demonstrates Nasdaq bothers about who is using crypto assets and how they are being utilized. Since questions regarding the importance of how crypto was used previously continue to be sorted out, this issue will likely continue to become more salient.
The second section of the document is called “KYC/AML,” which stands for Know-your-customer/anti-money laundering. Previously it was more about business models but what is interesting about this section is that it relates to reputability like, “What is the organizational structure and what are the founder’s backgrounds (tech or financial markets expertise)”?
The value that past experience plays is something that stands out about the question. From the very beginning of the cryptocurrency, and now with other crypto-assets, the biggest value proposal of the company that it would make funds accessible to everyone and a gamut of industries by allowing the retail customers to make and run their respective financial products.
Now, talking about the final segment of the document, it arouses the question, “Are crypto asset listing standards in place?” On the other side, Circle and Coinbase, two of the biggest cryptocurrency exchanges, posted their new asset listing process so as to be seen by the public, while others are quite opaque.
Talking about the most recent event that happened in June 2018 where the SBI virtual currencies stated that they are also using the Nasdaq’s matching system. Before the event, in April 2018, Gemini cryptocurrency exchange announced that they were also making use of Nasdaq’s SMARTS surveillance system.
Later than, helping out these exchanges with the technical support, Nasdaq’s interest in blockchain has been constrained to financing in non-cryptocurrency applications of the technology to a great extent. In fact, Nasdaq joined a $30 million venture round in Chain in September 2015, a blockchain startup that in due course collaborated with Nasdaq to launch Linq, a platform that helped to issue private equities. Nasdaq also made an investment of $20 million in Symbiont last week, another blockchain company building services that helps reducing middlemen in conventional financial workflows.