Institutional participation in digital assets is no longer a question of “if,” but “how fast.” In an interview with Traders Magazine, Dr. Najamul Hasan Kidwai, Co-Founder, President & CEO of C1 Fund, shares his thoughts on what’s driving institutional adoption, how market structure is evolving, and what the future could look like when digital assets become a seamless part of the global financial system.
Institutional adoption has accelerated in the past few years. In your view, what are the key drivers bringing more traditional institutions into the digital asset ecosystem today?
In my view, the primary driver today is regulatory de-risking combined with product accessibility. The approval of spot ETFs was a watershed moment, not just for the capital inflows, but because it gave traditional committees a regulated, “safe” vehicle to gain exposure. Furthermore, the shift in accounting standards (FASB) has removed the “handcuffs” for corporate treasuries, allowing them to hold these assets without the punitive impairment rules of the past.
As digital asset markets mature, how would you describe the current stage of market structure development compared to more established asset classes?
I would describe the current market structure as being in its “Institutional Adolescence.” If established asset classes like equities are at Version 5.0, digital assets are at Version 3.0. We are moving away from the “all-in-one” exchange model, where one entity handled execution, custody, and clearing, toward the disaggregated model traditional finance expects. This separation of duties is the final bridge to mass institutional participation.
Liquidity in digital assets remains fragmented across multiple venues and jurisdictions. From a market-structure perspective, what trends do you see emerging that could help consolidate or deepen liquidity?
Fragmentation is a byproduct of a 24/7 global market. However, we are seeing the rise of institutional Prime Brokerage and Smart Order Routing (SOR). These services allow a firm to interact with dozens of liquidity pools through a single entry point. Additionally, the move toward cross-chain interoperability is beginning to link “siloed” liquidity on different blockchains, creating a more unified global pool.
Price discovery is often cited as a challenge in digital assets. What improvements in data quality, standardization, or infrastructure are needed to create more reliable, transparent pricing for institutions?
To achieve truly transparent pricing, we need to bridge the “data gap.” This means moving toward standardized FIX (Financial Information eXchange) protocols that traditional desks already use. We also need widespread adoption of regulated benchmarks—indices that filter out “wash trading” and aggregate volume-weighted prices from only the most compliant venues. Reliable data is the bedrock of institutional trust.
Blockchain infrastructure continues to evolve, particularly around settlement, interoperability, and tokenization. Which developments do you believe will have the biggest impact on institutional participation?
Of all the technical developments, Atomic Settlement (DvP) will have the biggest impact. The ability to settle a trade instantly—where the asset and the payment move simultaneously—eliminates counterparty risk and drastically reduces the capital tied up in “settlement lag.” For a bank, the efficiency gain of moving from T+1 to T+0 is a massive bottom-line driver.
Regulatory clarity varies widely across global markets. How do you see the regulatory landscape shaping the next phase of growth for institutional digital assets?
Regulation is no longer a headwind; it is the primary catalyst. Frameworks like MiCA in Europe and clear regulation in UAE have provided a blueprint for the rest of the world. In the next phase, I expect to see “jurisdictional arbitrage” fade as the US and other major markets formalize their rules. Clarity allows institutions to build 10-year roadmaps rather than 6-month experiments.
Traditional market participants often look for familiar safeguards, custody standards, clearing processes, and operational controls. Where is the industry making the most progress in aligning with institutional expectations?
The industry has made the most progress in Custody and Bankruptcy Remoteness. The entry of Tier-1 custodians like BNY Mellon and State Street has solved the “Who holds the keys?” problem. We’ve moved from “hot wallets” to sophisticated multi-party computation (MPC) and segregated account structures that align perfectly with the fiduciary duties of large asset managers.
Tokenization of real-world assets is gaining momentum. Where do you see the most realistic near-term opportunities, and what structural barriers still need to be addressed?
The most realistic near-term opportunity is in high-quality liquid assets (HQLA) like U.S. Treasuries and Money Market Funds. The “on-chain” dollar is already here. The structural barrier that remains is the legal wrapper: we need the legal system to recognize a “token” as the definitive proof of ownership in the same way it recognizes a physical deed or a centralized ledger entry.
As private digital asset markets expand, what inefficiencies or gaps do you see that could create opportunities for more sophisticated institutional players?
As private markets expand, the biggest gap is in valuation transparency and secondary liquidity. For sophisticated players, this creates an opportunity to provide “valuation services” or to act as a liquidity provider for private tokens that have strong fundamentals but lack an active secondary market. There is a significant “complexity premium” to be earned here.
Looking ahead, what does a fully mature, globally integrated digital asset market look like to you, and how far are we from that vision?
A fully mature market is one where the word “digital” disappears. We won’t talk about “digital assets” any more than we talk about “digital emails” today. It will be a globally integrated, 24/7 financial layer where stocks, bonds, and currencies move as seamlessly as data. We are likely 3 to 5 years from the infrastructure being “ready,” and 10 years from it being the global default.
