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Nasdaq CEO hopeful IPOs will pick up in 2023, calls for more crypto regulation

Reuters NEXT Newsmaker event in New York City

(Reuters) -Adena Friedman, chief executive officer of Nasdaq Inc, said on Wednesday she expects a quiet first half of 2023 for initial public offerings as investors remain cautious, but is hopeful activity will pick up in the second half of the year.

There are currently about 200 companies in the pipeline for initial public offerings on the Nasdaq, which is below the range of the last few years of 250 to 300, Friedman said during an interview at the Reuters NEXT conference.

Last year was a banner year for IPOs at Nasdaq with over 750 new listings, fueled in large part by the boom in special purpose acquisition companies (SPACs), but that activity has slowed to a trickle as high inflation and rising interest rates have soured market sentiment and SPACs have drawn regulatory scrutiny.

Nasdaq had 143 IPOs in the first nine months of 2022, versus 557 over the first three quarters of 2021.

Friedman also said she anticipates Nasdaq's cryptocurrency custody business, Nasdaq Digital Assets, which it announced in September, to launch in the first half of 2023, pending regulatory approval.

Nasdaq has been involved in the cryptocurrency space for several years, providing trading and surveillance technology to digital asset exchanges, and Friedman said the space needs to be more highly regulated in order to gain traction with institutional investors.

"Now is the time for regulation to catch up and make sure that as we go forward, to have safety and soundness, but we also allow for innovation and a nimble ecosystem," she said, adding Nasdaq has been an innovator for 50 years in a highly regulated industry.

Cryptocurrencies have been under pressure this year after a string of high profile bankruptcies at crypto lenders and exchanges, the biggest being FTX, which collapsed after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.

FTX's failure has left an estimated 1 million creditors facing losses totaling billions of dollars.

Nasdaq has also made a big push into anti-financial crimes software, with its $2.75 billion acquisition of Verafin, announced in December 2020.

Friedman said she believes Nasdaq's fast-growing anti-financial crime unit could become a $1 billion-a-year business, three times its current revenue.

To view the Reuters NEXT conference live on Nov. 30 and Dec. 1, please click here.

(Reporting by John Sinclair Foley and John McCrank in New York and Manya Saini in BengaluruEditing by Matthew Lewis and Chris Reese)