The world’s second-largest stock exchange, Nasdaq, is making significant strides in the digital asset space. According to a Forbes report from January 30, Nasdaq’s advanced SMARTS Market Surveillance system is now being utilized by seven cryptocurrency exchanges globally. This marks a pivotal moment in the convergence of traditional financial infrastructure and the rapidly evolving crypto ecosystem.
The SMARTS platform, originally developed for monitoring equities and derivatives markets, offers real-time and historical data analysis to detect suspicious trading behaviors such as market manipulation, wash trading, and money laundering. By extending this technology to crypto platforms, Nasdaq is helping bring institutional-grade oversight to an industry long criticized for opacity and regulatory gaps.
How SMARTS Enhances Crypto Market Integrity
SMARTS is a cross-market, cross-asset surveillance solution that uses sophisticated pattern recognition and behavioral analytics. It correlates trading activity across multiple venues and asset classes, enabling regulators and exchange operators to identify anomalies that may indicate illicit behavior.
For crypto exchanges, adopting SMARTS signals a commitment to transparency, compliance, and investor protection—key factors in gaining trust from both users and regulators.
👉 Discover how leading platforms are integrating advanced surveillance to build safer crypto markets.
Only two of the seven crypto exchanges currently using SMARTS have publicly confirmed the partnership:
- Gemini, the exchange founded by the Winklevoss twins
- VCTrade, operated by Japanese financial services giant SBI Holdings
Despite limited public disclosure, Nasdaq’s involvement suggests a growing trend of traditional financial institutions lending credibility and infrastructure to digital asset platforms.
Rigorous Evaluation for Crypto Partnerships
Nasdaq does not grant access to its surveillance tools lightly. The company evaluates potential crypto partners based on three broad criteria:
- Business Model Viability – Assessing whether the exchange operates with long-term sustainability and clear revenue streams.
- Regulatory Compliance – Reviewing KYC (Know Your Customer), AML (Anti-Money Laundering), and overall governance frameworks.
- Listing Transparency – Examining how new crypto assets are vetted and listed on the platform.
These standards reflect Nasdaq’s emphasis on reputation management and responsible innovation. As one representative noted, the level of due diligence applied to crypto firms exceeds what’s typically done for established financial institutions.
Approximately 20 Nasdaq employees are dedicated to reviewing applications from crypto exchanges. Their role goes beyond technical capability—they also assess whether applicants possess the ethical intent to use surveillance tools responsibly.
Tony Sio, head of Nasdaq’s market surveillance division, explained in the Forbes report:
“From a historical standpoint, we wouldn’t conduct such extensive reviews for well-known clients. But when we began working with lesser-known startups, we realized this level of scrutiny was necessary.”
This proactive stance underscores Nasdaq’s vision: not just to provide technology, but to shape a more trustworthy digital asset economy.
Expanding Footprint in the Digital Asset Ecosystem
Nasdaq’s engagement with the crypto sector extends far beyond surveillance. In November of last year, it partnered with U.S.-based investment firm VanEck to launch a suite of regulated digital asset products powered by the SMARTS system. These offerings aim to bridge institutional finance with blockchain-based assets under strict compliance protocols.
Additionally, some crypto platforms have adopted other Nasdaq technologies. For instance, DX Exchange, a tokenized asset trading platform, leverages Nasdaq’s Financial Information Exchange (FIX) protocol—a standard in traditional markets for secure and efficient order routing.
In a major strategic move this week, Nasdaq joined Citigroup and Mike Novogratz’s Galaxy Digital Holdings in investing $20 million into a smart contract blockchain platform designed for capital markets. This initiative aims to modernize post-trade processes, settlement systems, and asset tokenization using decentralized infrastructure.
Leadership Vision: Crypto as a Future Economic Pillar
Nasdaq President and CEO Adena Friedman has been a vocal advocate for blockchain technology. Earlier this month, she reaffirmed her belief that the crypto industry will play a vital role in shaping the future global economy.
She described blockchain as:
“A genius and creative invention in and of itself.”
Friedman envisions a future where digital assets are seamlessly integrated into mainstream finance—backed by robust regulatory frameworks and secure technological foundations. Her leadership has positioned Nasdaq at the forefront of this transformation.
Frequently Asked Questions (FAQ)
Q: What is the SMARTS Market Surveillance system?
A: SMARTS is Nasdaq’s comprehensive monitoring tool that detects market abuse across multiple asset classes using real-time data analysis, behavioral modeling, and anomaly detection algorithms.
Q: Why are crypto exchanges adopting SMARTS?
A: To enhance compliance, prevent fraud, and build trust with regulators and investors by implementing institutional-grade surveillance mechanisms.
Q: Are more exchanges expected to adopt SMARTS in 2025?
A: While Nasdaq hasn’t disclosed its full pipeline, growing regulatory pressure and demand for transparency suggest increased adoption among major crypto platforms.
Q: Does Nasdaq operate its own cryptocurrency exchange?
A: No, Nasdaq does not run a crypto exchange. Instead, it provides technology—including surveillance, trading engines, and market data solutions—to third-party platforms.
Q: How does SMARTS help combat wash trading?
A: By identifying patterns such as repetitive buy-sell orders at or near the same price, minimal price variation, or trades between linked accounts—common indicators of artificial volume inflation.
👉 Learn how cutting-edge surveillance tools are preventing market abuse in real time.
The Road Ahead: Bridging Traditional Finance and Web3
As digital assets continue maturing, the line between traditional finance and decentralized ecosystems is blurring. Nasdaq’s expansion into crypto surveillance and infrastructure reflects a broader industry shift toward regulated innovation.
By equipping crypto exchanges with proven financial technologies like SMARTS, Nasdaq isn't just offering tools—it's setting standards. This alignment benefits everyone: investors gain confidence, regulators see improved oversight capabilities, and exchanges strengthen their operational integrity.
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With increasing institutional interest and technological integration, 2025 could mark a turning point where transparency becomes the norm—not the exception—in the crypto economy.