Nasdaq Inc., one of the world’s leading financial institutions and the company behind the popular Nasdaq stock exchange, plans to begin offering cryptocurrency custody services by the end of the second quarter of 2023.

According to a Bloomberg report on Friday, Ira Auerbach, senior vice president and head of Nasdaq digital assets, revealed the development in an interview at the ongoing Blockchain Week summit in Paris.

Bloomberg further reported that Nasdaq is currently in the process of obtaining all required technical infrastructure and approvals from various regulators.

To this end, the US-based financial company has sought permission from the New York Department of Financial Services (NYDFS) to establish a limited purpose trust company to oversee this new business unit of its.

Nasdaq is one of the world's traditional financial giants with a total valuation of $25.95 billion. The company is responsible for operating three stock exchanges in the United States and another seven in Europe.

Nasdaq steps up interest in crypto space

The launch of a crypto custody service would represent Nasdaq’s first foray into the crypto world. However, the company’s interest in the $1 trillion market has been notable for some time.

As early as 2018, the company's CEO Adena Friedman said that Nasdaq is willing to provide cryptocurrency trading services and operate as a cryptocurrency exchange after implementing corresponding regulations.

In 2022, Nasdaq also attracted widespread attention in the crypto space by partnering with Brazil's largest broker XP to establish a cryptocurrency exchange, XTAGE. However, XTAGE currently only provides support for Bitcoin and other cryptocurrencies, and plans to add other forms of digital assets to its services later.

That said, Nasdaq’s proposed cryptocurrency custody platform is expected to operate in a similar manner.

In an interview Friday, Senior Vice President Ira Auerbach said the new business will begin operations by providing security for market giants bitcoin and ether, before moving on to include other cryptocurrencies and digital assets.

Overall, the cryptocurrency custody service represents a key step in the exchange operator’s goal of operating a digital asset division that offers a wide range of services, including “execution for financial institutions.”

Can Nasdaq capitalize on recent bankruptcies in the crypto space?

By launching a crypto custody service, Nasdaq becomes a traditional financial institution that can gain a foothold in the crypto space, especially after the recent trend of bankruptcies associated with the industry.

In 2022, the cryptocurrency market was hit hard with the unexpected collapse of cryptocurrency giant FTX. More similar incidents occurred as we entered the new year, with U.S. authorities shutting down crypto-friendly banks Silvergate Capital and Signature Bank after they ran into financial troubles.

Depending on how efficiently they serve this market, Nasdaq could capitalize on this gap and provide a much-needed safe haven for investors and businesses alike.

In other news, the cryptocurrency market remains around $1.1 trillion after the market cap rose 1.96% in the past 24 hours.