Why Nasdaq is working with R3 to issue digital tokens

Nasdaq, one of America’s foremost (non-crypto) exchanges has partnered with R3, the company responsible for the business-friendly Corda blockchain platform.

Johann Toll, Nasdaq’s head of digital assets, told Decrypt, the project is focused on building “full lifecycle solutions for digital assets marketplaces.”

With its “long-term, non-exclusive, collaboration agreement” with R3, announced Wednesday, the two companies will help financial institutions issue tokens and build marketplaces for digital assets.

“Nasdaq believes that blockchains will revolutionize the financial industry and they want to be a centerplayer in that transition,” Eric Wall, CIO of Arcane assets and a former blockchain lead at Nasdaq, told Decrypt.

“What Nasdaq has been struggling with is figuring out is [whether] these blockchains will be public, as in cryptocurrency networks, or if it will be enterprise solutions where they can remain in control,” he added. 

Nasdaq has already identified some areas where digital assets may have a role. Existing exchanges and financial institutions “see an opportunity to automate and digitalize manual processes in the bilateral OTC markets,” wrote Toll in a blog post. 

He touched on the opportunity to build new marketplaces in industries such as healthcare, shipping, and logistics to “trade and track existing or novel asset classes efficiently.” 

“By creating a digital representation of the assets, they can be tracked through their entire life cycle from inception and issuance to trading, settlement and delivery,” he wrote. No specifics yet, but “the prototypes,” wrote Toll, “have been built.” 

To mastermind his plan, he’s chosen R3. He wrote that this is because its Corda Enterprise platform “is designed specifically for highly-regulated environments with stringent requirements on quality of service,” and because of R3’s prior experience with leading financial institutions. 

And that’s why Corda’s blockchain technology is now integrated into Nasdaq’s financial frameworks. While R3 will handle the blockchain stuff, Toll said that Nasdaq will offer to financial institutions its “matching engines, surveillance, data discovery and reporting services.” 

Whether it likes it or not, blockchain is going enterprise.