Nasdaq’s bitcoin deal could be a cryptocurrency Trojan horse

Bitcoin believers proudly tout what they describe as the supremacy of the blockchain—the technology behind their favorite currency—over traditional means of exchange.

Indeed, we’ve seen a rush this year of companies doing business on Wall Street building more transparent, faster versions of traditional exchange tools using the blockchain. But yesterday, Nasdaq and a little-known bitcoin startup, Noble Markets, announced something new.

The New York City-based bitcoin exchange, still in beta, had leased the stock exchange’s X-stream technology to sell bitcoins and other crypto-assets. While bitcoin supporters have long argued that global bitcoin domination was inevitable, this partnership could be the Trojan horse that finally puts the cyrptocurrency—and other crypto-assets—in the hands of institutional investors on the macro scale.

“We are excited that Nasdaq shares our vision and commitment to support the development of this ground-breaking market,” said John Betts, CEO and founder of Noble Markets, who previously worked at Goldman Sachs Group Inc., Morgan Stanley and UBS Group AG, in a statement. “Our Marketplace, powered by X-stream, allows us to leverage a proven and trusted venue that supports global trading worth billions of dollars reliably, every day.”

Like many other similar services announced this year, Noble’s marketplace platform promises lower latency—faster transactions—and increased transparency of crypto-assets trading activity.

With Nasdaq’s exchange technology powering over 100 marketplaces in North America, Latin America, Europe, Asia, Australia, Africa and the Middle East, the partnership signals a major gateway for institutional market participants and liquidity providers to get involved in the crypto-game.

“Large investors need to know that their assets are secure, that there is liquidity if they need to quickly open or exit a position, and that there is actually profit to be made,” according to a Bitcoin Magazine report. “By connecting with exchanges, Noble Markets will be able to help these institutional investors get in and out of bitcoin with far more certainty.”

This isn’t the first major deal this year between a bitcoin company and a major New York City exchange. In January, the New York Stock Exchange announced it had joined in a $75 million investment in Coinbase, at the time, the largest bitcoin investment ever. Also joining in that round were mainstream banks, USAA Bank and BBVA, giving the troubled cryptocurrency yet another sheen of legitimacy from established players.

In February New York City-based Coinsetter took a different approach to integrating bitcoin into the mainstream economy by adapting the blockchain ledger technology behind bitcoin into their traditional asset trading system.

Then, earlier this month, the women once called “most powerful woman on Wall Street,” Blythe Masters, who infamously played a major role in the creation of the credit derivatives widely blamed for the “Great Recession,” moved on from her previous gig as the chief financial officer of J.P. Morgan, to take over as CEO of Digital Asset Holdings LLC, a bitcoin software platform for institutional trading of digital currency and other digitized financial assets.

Certainly, not everyone will be happy about the increased intimacy between bitcoin and traditional economics. When the currency was created in 2008 by someone going using the name Satoshi Nakamoto, he publicly made it clear he intended his creation to be an alternative to the mainstream financial system—including banks and Wall Street— which he blamed for the financial crisis beginning in 2007, known as the “Great Recession.”

Bitcoin has recovered from its low this year of $177 in mid-January to $246 today. But is still down from its all-time high of $1,200 at the end of 2013. Noble Markets will go live later this year. “The key thing here is this has to be done up to our level of quality,” Betts told me in an interview this afternoon. “We want to live up to the high standards that we’ve set.”

Leave a Reply