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Nasdaq could include cryptocurrency trade in future, suggests CEO Adena Friedman

Nasdaq is open to becoming a cryptocurrency exchange, the company’s CEO said in a recent interview.

In an interview with CNBC's Squawk Box, Nasdaq CEO Adena Friedman was not only bullish on cryptocurrencies but also hinted on the possibility of the American stock exchange giant becoming a cryptocurrency exchange in the future.

"Certainly Nasdaq would consider becoming a crypto exchange over time," Friedman said. "If we do look at it and say 'it's time, people are ready for a more regulated market,' for something that provides a fair experience for investors."

Crypto experts have welcomed Friedman’s comments. Joseph Weinberg, OECD Think Tank Special Advisor & Shyft Chairman, said that such a move could be “great thing,” but highlighted that regulation could be a major roadblock for this to become a reality.

“You need to solve and create an informed model on self-regulation. By that, I mean how you operate a bitcoin "marketplace" while at the same time enable a security token exchange. SROs take years to build from scratch. It's not an easy process, but the entity that cracks it unlocks the holy grail in completing the bridge between traditional and the crypto ecosystem,” Weinberg said. "There's a division right now between crypto marketplaces and security token exchanges. However, because it's all within the same asset class, a proper exchange should be both. Like the derivatives market, it's highly complex. For example, if you move from a derivative to a future, those are two entirely different models, but it's effectively two changes in one. Not to mention that crypto tokens present a tonne of edge cases in how they function, which makes the models quite different from the traditional way of thinking about exchanges."

Collaboration with Gemini

Meanwhile, Nasdaq is also extending support to cryptocurrency exchanges. On Wednesday, it announced a collaboration with Gemini cryptocurrency exchange, which will allow the latter to leverage Nasdaq's SMARTS Market Surveillance technology to monitor its marketplace.

Yo Kwon, CEO & Co-founder of Hosho and Co-founder of crypto exchange Coinsetter, believes that it’s a smart approach for traditional exchanges like Nasdaq to leverage knowledge from cryptocurrency exchanges such as Gemini. However, he stressed on the cybersecurity challenges particularly in case of wallet management.

“There are unique challenges from a cybersecurity perspective that need to be accounted for such as wallet management. Someone who has already had to deal with those challenges will put Nasdaq on a better footing before they seek professional cybersecurity consultation,” Kwon said. "Wallet management is highly complex when covering different coins and tokens that have a variety of capabilities and best practices available. Most tokens released are managed by a smart contract that may or may not be secure. Exchanges need to be wary of not only their own security practices, but the innate security of the coins and tokens themselves and their respective wallets. Many of the other aspects relating to cybersecurity of a prominent regulated exchange should already be taken care of. "

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