The tech-heavy stock exchange, Nasdaq, has become the latest traditional stock market to adopt blockchain technology in managing digital assets.
According to a Wednesday report, Nasdaq, through a partnership with R3, will use the Corda ecosystem to create marketplaces for the issuance, trading, settlement, and management of digital assets.
R3 is an enterprise blockchain technology company. The firm delivers Corda, a next-generation platform powered by industry-leading distributed ledger technology.
Nasdaq will integrate the technology into its Financial Framework, which it will use alongside other capital markets grade tools, including matching systems, datacasting, surveillance, and post-trade software.
According to R3’s chief revenue officer, Cathy Minter, financial institutions around the world are becoming more aware and open to the potentials of digital assets. She believes the Nasdaq and R3-powered platform will provide a safe, reliable and regulated environment to accommodate these digital assets for participants in the capital markets.
“Together with Nasdaq, we will provide a world-class platform on which digital asset markets can be built, helping to rapidly accelerate the growth of these markets and others around the globe,” Minter added.
The American stock exchange provides market infrastructure technology to more than 120 marketplaces, central securities depositories, clearinghouses, regulators, and some digital assets exchanges.
Nasdaq’s move to collaborate with R3 is part of the exchange’s attempts to redesign itself as a tech stock market since the massive decline in market volumes. The partnership will significantly increase Nasdaq’s efforts in helping digital asset exchanges to improve transaction transparency to match the same level found in the capital markets.
Speaking on the development, Johan Toll, Head of Digital Assets at Nasdaq commented:
This collaboration between Nasdaq and R3 is another important milestone in Nasdaq’s continuous development of technologies that support the creation and growth of dynamic, trusted digital asset marketplaces. R3’s Corda platform will fit well into Nasdaq’s technology ecosystem and partnership strategy and allow us to harness the power of scalable design and a new level of interoperability.”
In January 2019, Nasdaq partnered with cryptocurrency exchanges that wanted to improve their transparency standards. At that time, Nasdaq already possessed a sophisticated surveillance technology designed to scan transactions and identify fraudulent patterns.
The crypto exchanges were expected to pass a Nasdaq-prepared examination to qualify for a collaboration with the stock market. Only seven exchanges, including Gemini and SBI Virtual Currency, were able to pass the test, which involved questions on KYC/AML, Business Model, and Exchange Governance & Controls.
Over the past year, the Nasdaq exchange has been bullish on digital assets. In February 2019, the tech-heavy stock market unveiled the addition of a Bitcoin Liquid Index (BLX) and Ethereum Liquid Index (ELX) to its trading services. The indices were added to Nasdaq’s 40,000 indexes, including Nasdaq and Nasdaq Composite.