U.S.-based stock market major Nasdaq is planning to develop a system to help institutional digital assets users manage tokenized collateral. To do so, Nasdaq announced a partnership with crypto infrastructure firm Talos on Monday. The move makes for another step wherein traditional finance players in the U.S. are charting ways to bridge the gaps in between traditional and decentralized finance.
Nasdaq said 25 percent of the collaterals that big banks collect to back their deals is presently stuck in inefficient accounts that rarely earn interests. Citing its own findings, Nasdaq said around $35 billion are locked in such unmovable collaterals.
If these assets are, however, tokenized on blockchains then banks will be able to move these around globally, it noted.
In order to give banks this as a secure option, Nasdaq and Talos have agreed to work together. While Nasdaq will pitch in the Calypso technology, Talos will provide its own infrastructure that values and helps crypto assets trade. The Calypso technology is a standard tool that is used by banks to manage traditional risks and margins.
“The partnership addresses structural barriers that have prevented widespread adoption of tokenized collateral in institutional markets, including the challenge of integrating digital assets into existing risk management and collateral workflows,” Nasdaq said in its statement on Monday.
Announcing the development on X, Nasdaq said the move is intended to advance real time mobility of traditional-turned-tokenized assets with unified risk management solutions.
As part of this partnership, Nasdaq has opened up access to its Trade Surveillance technology for Talos clients. This tool can assist crypto-friendly enterprises with identifying instances of wash trading, market manipulation, and fake orders.
By combining Talos’s digital asset infrastructure with Nasdaq’s Calypso and Trade Surveillance platforms, firms can connect workflows for execution, risk, collateral and compliance to reduce operational friction across both on- and off-chain asset classes,” said Anton Katz, the CEO and Co-Founder, Talos.
Nasdaq has been making inroads into the digital assets markets for a while. Last year, it even filed with the SEC to launch tokenized securities on its heavily used trade platform. Recently the SEC approved its trial for tokenized stock trading.
Crypto giants like Coinbase, Robinhood, and Circle are among Web3 players that have listed their stocks on Nasdaq over the last few years.
Talos. meanwhile, already has Wall Street links. It was founded in October 2018 by Katz and Ethan Feldman (CTO), both of whom made high-frequency trading systems for major banks during their run at AQR Capital Management and Broadway Technology. Backed by VC giants like a16z and General Atlantic among others, the NYC-headquartered firm has clients like BlackRock, BNY, Fidelity Investments, and Robinhood among others.