Nasdaq’s involvement in crypto space is increasing day-by-day. Until today there was news that company is licensing its fraud detection system to some cryptocurrency exchanges, and now it looks like a new exchange has also got the order matching, order placing and clearing system of Nasdaq. The company’s name is Bcause, and they’re working on an entire crypto ecosystem. Getting Nasdaq’s software to build their ecosystem is nothing short of success in the initial days.
The announcement in this regard was done by Fred Grede, the CEO of Bcause. He said in a statement:
“This is a pure technology licensing agreement, so what we’re licensing is their order entry platform, their trade matching system, their clearing systems and their market surveillance systems.”
It’s worth noting that Bcause is probably the first cryptocurrency exchange platform to get the complete Nasdaq Financial Framework for developing its ecosystem. And Grede thinks that this can be a major advantage on their part. He said:
“I’ve probably installed this system five times all over the world, in Hong Kong, in Bangkok. It’s world-class technology. That’s the best way I can put it. Nasdaq’s market technology powers more than 250 of the world’s market infrastructure organizations and market participants.”
But the partnership of Bcause with Nasdaq doesn’t end with the utilization of technology alone. Bcause will also launch spot trading on Nasdaq’s platform as part of a strategic move. In future company also plans to launch futures and derivatives trading. He said:
“We feel there’s a lot of issues in the crypto market today, and if we could get a foothold in spot trading, that’s immediate delivery versus payment. Then obviously we need CFTC [Commodity Futures Trading Commission] approval for derivatives trading and for clearing, and those applications are in process with the CFTC, but we just feel its better strategically to get a toehold in spot trading that we can leverage into derivatives trading.”
Grede is quite serious about his ambitions of launching derivatives trading. He knows what it takes, and he is also ready to take the necessary steps needed for it. Launching derivatives trading requires registration with FinCEN, and also requires compliance with various state regulations. Grede said about them:
“You need money transmitter licenses because you’re exchanging U.S. dollars for crypto, so you actually have to go to all 50 states to get approval to operate as a money transmitter in those 50 states. We won’t have all 50 by the time we launch, but we’ll probably have 25 or 30, and I think there’s five or six where you don’t need any kind of a license to do it, but […] there is no federal regulatory scheme over spot trading of crypto today.”
Nasdaq also sees Bcause as a potentially powerful player in the space. Nasdaq SVP Paul McKeown said:
“Bcause has methodically built a unique ecosystem that gives investors, partners and market players a holistic experience in tapping the cryptocurrency market and value chain […] By leveraging the Nasdaq Financial Framework, Bcause will have the scalability and modular functionality to introduce new micro-services and expand its business offerings to meet industry demands and the evolution of the digital assets economy.”
Bcause platform is targeting the launch of its spot trading in the first half of 2019. Now it will be interesting to see whether any other company receives the license to same Nasdaq technology or not. But one thing is clear for now: As NYSE enters crypto space with its Bakkt platform, Nasdaq is not going to sit back and watch the show.