Adena Friedman, Nasdaq president and CEO, wrote that crypto "could still be a global currency of the future," a nod that made the often forward-thinking stock exchange a cryptoverse darling over the past few days.
It’s been more than a decade since bitcoin took the world by storm. With several thousand competing cryptocurrencies vying for investor attention, the world of “crypto” has gone through the first phase of the classic invention lifecycle, marked by early pioneers, followed by hype, followed by proliferation of newcomers and then a dose of reality. What comes next is one of two outcomes:
1) Either the innovation finds practical utility followed by years of steady and sustainable commercial progress and integration into the economic fabric (e.g., the Internet); or
2) The invention fails to achieve broad adoption and its commercial applications as medium of exchange are limited (e.g., the Segway).
"We would argue that two key ingredients to establishing a practical utility and a more stable value are governance and regulatory clarity – both of which are antithetical to the original intent as a decentralized, ungovernable global currency," she wrote. "And yet, as with exchanges, transparency and fairness are the keys to trust, and without some level of oversight and regulation, it is not possible to demonstrate a level of transparency and fairness that will build trust. At Nasdaq, we are working to help cryptocurrencies gain investors’ trust by offering our technology for trade matching, clearing, and trade integrity to start-up exchanges."
She noted that the organization invested in ErisX, an institutional crypto marketplace, and is very interested in the future of the ecosystem - although regulation is key.
"While this year will be another proving ground for cryptocurrencies, we believe digital currencies will have a role in the future. The extent of its impact will depend on the evolution of regulation and broader institutional adoption," she wrote.