Nasdaq, the second-largest stock exchange in the world by market cap, has a team of 20 people to perform due diligence on exchanges that want to use its proprietary market surveillance technology to scan for fraudulent transaction patterns, Forbes reports.
While Nasdaq does not historically perform a large vetting process for its clients because they are generally fairly well-known, Tony Sio, Nasdaq’s head of exchange and regulator surveillance, told Forbes that as the exchange "started working with less well-known names, startups, then we realized we needed to do this check process.” These startups include Gemini and SBI Virtual Currency, two of seven cryptocurrency exchanges that have managed to pass Nasdaq's vetting process.
Sio provided Forbes with a detailed overview of the criteria Nasdaq uses to vet cryptocurrency exchanges. These criteria are broken into three categories: Business Model, KYC/AML, and Exchange Governance & Controls. Questions that evaluators must answer include “How reputable are the products available to trade on the venue?” and “Are crypto asset listing standards in place?”