Both Overstock and Nasdaq have been developing security token platforms over the past year, with Overstock being the first to launch: tZERO,

Now as far as i can tell inside the USA they are not keen on traditional brokers holding custody of Security tokens … have these guys hit some set backs by being custodian? (will Nash beat to market ?) assuming Security licence is granted ?

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We are not a custodian.

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Fabio can you elaborate on this. How does not being a custodian give NASH an advantage over these traditional players like tZero or Nasdaq. I am not able to get a full picture of this eco system that you are putting in place.

Moreover is it possible for NASH to have market place of custodians like onchain custodians, or any other professional custodians so that NASH’s customers who do not want to have a self custody can subscribe to these custodian services. I know I may sound stupid, but was thinking of this for quite a time.

If I may put my 2 cents … its Legal … they are not required to prove that Nash’s assets are separate from the client and hence don’t have to come up with “control locations” and Trustee’s to take custody of the private keys and manage on-chain transfers.

It actually looks like a nightmare and better left for Coinbase to set the president perhaps? … Non custodial appears to be a cake walk for securities compared to Custodial.

again just my opinion with limited access to info


Yes, it is a legal advantage as @redk says.

In general across the globe most securities regulations are related to reducing risks, the major risks for trading platforms are the risk of market fairness and funds mismanagement.

How will custodial platforms prove no one else has control of the keys or act on behalf of users ? That is simply impossible. They need to implement several audit and operational control mechanisms. I would also expect regulators to require strong insurances from those players - bringing their operational costs even higher. The matching fairness is even worse, how they provide proof that they have not acted maliciously on behalf of users when they control all the information needed to impersonate users ?

In summary the custodial exchanges will need to implement operational procedures and convince regulators they are able to match or exceed current standards on those items. The approach we took at Nash is to use a deterministic match engine and algorithm that relies on user secrets we do not control - so we cannot impersonate users, making the fairness risk zero and proven to not be broken, added to it being non-custodial user fund management risk is simple not present in Nash. The general outcome is that out of the gate we inherently comply with many of the regulatory requirements to trade securities across the globe. Additionally, we work on operational topics related to AML/CFT controls to meet further requirements. Those we will put in the market on 23/8 and continue to improve tirelessly. Platforms that skipped KYC or allowed users infringing basic identity checks will hardly ever be considered for those licenses.

Finally custodial exchanges are a step back even from traditional ones in most modern markets. They are a step back because even traditional exchanges are non-custodial today! Custody of assets is normally centralized (using the US as an example it is centralized in the DTCC), exchanges like Nasdaq or NYSE actually operate in the promise of intention by brokers, so brokers act on behalf of investors, this way exchanges are limited to guarantee the fairness and proper operation of it markets. I imagine will be hard for regulators to accept such regression just because assets have a different ledger technology.

[edit] removed mentions to time periods as those are highly uncertain and could be taken out of context.


This is about the best piece of text I’ve read all year! Go Nash! :nash:


If we run with the hypothesis; that their are serious practical and legal barriers to custodial exchange of digital securities…
Then I was wondering if you had any vague ideas of how the industry will progress forward in to this new securities market ?
Many thanks

If I may add…
Do you see the Thai tokenised security market unfolding in the same fashion as the US in regards to custody ?

This was the hypothesis we built in planning Nash in 2017, I first presented this to our partners at that time and had good feedback on the opinions (clearly that is no guarantee). We continue to monitor the space and try to be as pro-active as possible.

Publicly the SEC noted this interpretations about a month ago:

As a personal note @redk I see every digital security market requiring non-custodial platforms given how the risk profile is.



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I was just thinking about what you were saying about 2nd Generation Authentication.
Can I delegate express authority to “my beloved” to act on my behalf (within certain parameters… say, prohibiting withdrawal to unknown address ) without relinquishing the legal definition of Custody ?

What CFT boxs’ is Nash ticking? any thought or observations on Bakkt ?


looks like the legal advantage for Nash took a hit from Jay Claytons statements on the 10th.

…in regards to issuance of securities in a non custodial capacity… we’re certainly very strong from an audit perspective

could be some prohibitive cost issues associated with custodial ATS that ive left out of the argument


Which comments are you referencing specifically?

i was going on about the fact that custody for securities is getting close (according to clayton) our main competitors are all exchanges providing custody of tokenised securities.

Everything Jay said in this interview is in favor of Nash’s approach, not against it. I do not understand how you came to a conclusion that Nash took a hit. Some of Jay’s comments in the interview:

  • "How do we know that we can custody and have a hold of these crypto assets; that’s a key question.

Nash exchange allows each user to have custody of their own assets in their native forms. Custody is clearly in the hands of the user (not the exchange).

  • “An even harder question; given that they trade on largely unregulated exchanges - is how can we be sure that those prices are subject to manipulation”

From “the heart of of Nash” blog post

For the matching engine to work as a distributed system, it must possess a specific property: determinism. This makes the Nash matching engine unique within the blockchain space.

Determinism simply means that a given input will always generate the same output, regardless of who is running the system, where or on what hardware. If multiple nodes are to reach consensus, they must all be deterministic, which in turn proves the correctness of the whole system. Nash users do not have to trust that a centralized exchange or smart contract–based DEX is matching trades fairly. Nash can prove that our matching engine matches trades in the fairest way, and does so every time.

Jay’s two points on question of custody and fair/regulated trading are two pillars of Nash Exchange.


i did state we looked good from an audit perspective… My concern lies with custody solutions getting closer to approval

heres the transcript of where i think we could have taken a hit.

“have businesses come any closer to satisfying ur concerns ? …the short answer is yes”

I have interpreted this as SEC is getting closer to approving custody solutions for tokenised securities. In this case bitcoin comprises the ETF which makes it a security.

“An even harder question; given that they trade on largely unregulated exchanges - is how can we be sure that those prices are subject to manipulation”

-This is in specific regards to bitcoin ETF trading which doesnt effect Nash…
Please correct me if im wrong but i dont see the point in a non custodial crypto exchange offering a FTP bitcoin ETF.

All I care about is custody measures getting closer to approval and trading of STO’s reg a + and reg d

thats it …

Thanks for leaving ur comments and opinion btw … perhaps i have read this wrong… maybe one of the team can weigh in on it ?

If tZero and other security token exchanges make more regulatory progress, this is only beneficial for Nash. The security token space still needs to grow significantly, and we need more than just Nash to grow the asset class.

so you are conceding to the point that Jay is saying custody of securities is looking more likely…

but maintaining your stance that this news is not bad for Nash even tho ur interpretation of what was said has changed…