Nasdaq OMX Group Inc. has reportedly entered into an agreement with New York-based startup Noble Markets to power its future bitcoin trading marketplace.
Noble's platform would use Nasdaq's X-stream trading system, which already powers more than thirty marketplaces around the world. The new exchange would cater to large institutions and hedge funds looking for top Wall Street-grade quality to trade bitcoins.
Noble CEO John Betts said that he believes Nasdaq's involvement will help resolve mainstream investor concerns over the risks of trading bitcoins. He explained:
"They can say, 'These are sophisticated organizations; they have done their due diligence, and if it’s good enough for them, it’s good enough for us.'"
Betts previously led the development of electronic trading platforms at Goldman Sachs, Morgan Stanley and UBS.
In recent months, multiple new offerings have been announced, each vying to bring institutional-grade bitcoin trading to Wall Street. Recent examples include Coinbase Exchange and the Winklevoss twins' Gemini. While all have stated to become fully regulated marketplaces, formal regulation has yet to be formalized.
A couple of points may differentiate the Noble offering. First, and most intuitive, is that it plans to leverage a highly regarded matching technology used by leading marketplaces around the world.
In addition, Noble's accounts will be limited to corporate and institutional investors. According to Betts, client funds will be held in transparent, segregated accounts safeguarded by third-party institutions. In addition, the marketplace will employ a sophisticated, proprietary settlement system.
The venture may be the substance behind rumors last year of the Nasdaq looking to launch its own bitcoin exchange, perhaps in competition with venture capitalist Marc Andreesson. Such an undertaking would, theoretically, be part of a larger foray into the Forex trading markets.
It is possible that in the face of regulatory uncertainty, Nasdaq chose the path of acting as a technology provider and not as an official marketplace, a choice commonly made by trading software providers to avoid the regulatory headache.
Who Is Noble Markets?
The name is unfamiliar to most inside and outside the cryptocurrency sphere. The website brands the company as "capital markets for the Blockchain era" and appears to have been launched not long ago.
The company is reportedly backed by San Francisco-based Blockchain Capital and Chicago-based Tally Capital.
According to AnglelList, Betts founded the startup in November 2014.
