The Gemini crypto exchange founded by the Winklevoss twins launched an IPO last month, looking to raise up to $317 million. In a revised S-1 filing published today it said that the Nasdaq is investing $50 million in the cryptocurrency exchange as part of a private placement.
It also revealed a broader strategic collaboration with the stock exchange group, in which Gemini will provide custody and crypto staking services to Nasdaq’s clients, including listed companies and member firms. In return, Gemini will pay the Nasdaq a cut of any fees earned. A subsidiary, Gemini Trust, is a New York regulated trust company that can provide custody in a ringfenced manner.
Nasdaq had intended to become a crypto custodian itself, but shelved its plans in 2023 in the face of regulatory headwinds. Ironically, the overprotective stance from regulators handed crypto startups major advantages. Coinbase is the dominant institutional custodian, because the SEC effectively blocked banks from providing custody using the SAB 121 accounting rule. With the new leadership at the SEC rescinding SAB 121, traditional custodians such as BNY are starting to make inroads.
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