Today, Nasdaq CEO Adena Friedman said that Nasdaq is open to becoming a crypto exchange. Joseph Weinberg, OECD Special Advisor and Chairman of Shyft, a blockchain protocol for KYC/AML, and Yo Kwon, CEO of Hosho, a blockchain cybersecurity firm, comments from two unique perspectives on what this means from regulatory and security aspects.
Please see below for their thoughts.
Joseph Weinberg, OECD Think Tank Special Advisor & Shyft Chairman:
Should Nasdaq become a crypto exchange, “this could be a great thing! Regulation, again, is a massive roadblock to something like this happening. You need to solve and create an informed model on self-regulation. By that, I mean how do you operate a bitcoin “marketplace” while at the same time enable a security token exchange. SROs, take years to build from scratch. It’s not an easy process, but the entity that cracks it unlocks the holy grail in completing the bridge between traditional and the crypto ecosystem.
“There’s a division right now between crypto marketplaces and security token exchanges. However, because it’s all within the same asset class, a proper exchange should be both. Like the derivatives market, it’s highly complex. For example, if you move from a derivative to a future, those are two entirely different models, but it’s effectively two changes in one. Not to mention that crypto tokens present a tonne of edge cases in how they function, which makes the models quite different from the traditional way of thinking about exchanges.”
Yo Kwon, CEO & Co-founder of Hosho and Co-founder of crypto exchange Coinsetter:
“It’s smart for traditional exchanges like Nasdaq to leverage knowledge from existing cryptocurrency exchanges such as Gemini. There are unique challenges from a cybersecurity perspective that need to be accounted for such as wallet management. Someone who has already had to deal with those challenges will put Nasdaq on a better footing before they seek professional cybersecurity consultation.
“Wallet management is highly complex when covering different coins and tokens that have a variety of capabilities and best practices available. Most tokens released are managed by a smart contract that may or may not be secure. Exchanges need to be wary of not only their own security practices but the innate security of the coins and tokens themselves and their respective wallets. Many of the other aspects relating to cybersecurity of a prominent regulated exchange should already be taken care of. “
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