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Nasdaq Expands Anti-Financial Crime Technology for Digital Assets

Nasdaq created a dedicated crypto team at the beginning of this year and will continue to invest after launching a suite of solutions in anti-money laundering, fraud detection and surveillance that can also be used by traditional firms moving into the space.

 Valerie Bannert-Thurner, Nasdaq

Valerie Bannert-Thurner, head of the buy-side and sell-side solutions business within Market Technology at Nasdaq, told Markets Media: “We created a separate investment request for crypto early this year that was well supported and we have set up a dedicated team. This is the beginning of a long stream of investments and innovation in the crypto space.”

In September Nasdaq announced the launch of a new business, Nasdaq Digital Assets, which includes marketplace technology for digital asset exchanges, crypto-related index solutions for tradable products and the expansion of crypto-native anti-financial crime offerings.

Bannert-Thurner said that over time Nasdaq has begun to serve crypto-native firms from multiple perspectives.

“We will always provide crypto exchanges with tech capability and we now have a suite of solutions in AML [anti-money laundering], fraud detection and surveillance that can also be used by traditional firms moving into the space,” she added.

Although Nasdaq have not been labelled as a crypto-native firm, Bannert-Thurner argued this a strength because the group knows regulation, how to deal with scale, understands risks extremely well and its technology lends itself incredibly well to the space.

“We will build on our core strengths and the acceleration and growth we have been experiencing will continue because of the investments we have made and the crypto-specific skills and capabilities we have acquired and built,” she added.

As a result, Nasdaq surveillance solutions already had capabilities that have helped tremendously in detecting market abuse in large crypto markets according to Bannert-Thurner. She continued that Nasdaq’s expertise lies in detecting layering, ramping, and spoofing in highly liquid, highly volatile and deep markets by analyzing order book data, and this is also exactly what is needed to effectively protect trading participants in cryptocurrency markets.

Bannert-Thurner said: “In our crypto surveillance solution we process data volumes that far exceed what we see in traditional markets like the US options market for example.”

Nasdaq’s surveillance solution for crypto now covers more than 35 exchanges including Binance, Coinbase Pro, FTX US, and Gemini, which represents more than 2000 coins.

The next big step in the expansion plan is to add crypto derivatives markets.

A differentiator for Nasdaq is that the group’s focus has been around financial crime risk – where financial crime is happening and how to help  customers detect it, according to Bannert-Thurner. In contrast, there are a lot of firms in the crypto anti-financial crime space that focus on risk scoring wallets and blockchain analytics only.

“As such we run our analytics across the fiat and the crypto legs and across the off-chain and on-chain activities,” she added. “Wallet risks, on-chain behaviors, and crypto specific network explorations are an integral part of our overall anti-money laundering and fraud detection solutions”

Money laundering and fraud can take different forms in crypto but, at some point they move off-chain. Therefore, Nasdaq did not want to create systems that are only focused on blockchain technology, but wanted to go across fiat and crypto.

For example, Nasdaq provides network graphs that follow the money and has expanded that capability to map out on-chain activity, and also show the fiat legs between banks. For anti-money laundering and financial crime Nasdaq natively integrates risk scoring, on-chain analytics and the flow of funds into the overall risk detection behaviours.

“We did not think it was wise to separate the two worlds because financial crime does not just happen on-chain but typically touches the traditional world at some point,” said Bannert-Thurner. “This is our key strength as nobody natively integrates crypto and fiat legs into the bigger overall analysis and monitoring.”

Despite the fall in crypto valuations, which has been called the ‘crypto winter’, Bannert-Thurner said Nasdaq has not seen retail brokers or proprietary trading firms pulling back.

“Regulatory action is driving demand,” she added. “We have invested a lot in our agility and being able to turn around quickly on new demands and emerging themes, topics and risks.”


The importance of cybersecurity was highlighted by October 2022 becoming the biggest ever month for hacking activity.