Nasdaq has launched a new business unit, Nasdaq Digital Assets, designed to enable the digital asset ecosystem with a suite of solutions to allow institutions to engage in activities related to digital assets. Led by Ira Auerbach, this new business unit advances Nasdaq’s ambition to accelerate the adoption of digital assets by providing trusted and institutional-grade solutions.
We spoke with Auerbach, Senior Vice President and Head of Digital Assets, to learn more about him and get his insights on the digital asset ecosystem, as well as the division’s strategic roadmap and product development.
Welcome to Nasdaq, and congratulations on your new role! Could you give us a brief overview of your career and what led you to Nasdaq?
Thank you, I’m very excited to be here. Early in my career, I worked on a synthetic Collateralized Debt Obligation (CDO) desk at BNP Paribas during the 2008 financial crisis. Given the way the market was trending at that time, I saw the writing on the wall and transferred over to the Foreign Exchange (FX) trading department, which was experiencing strong growth due to market volatility. Over the next few years, I held many roles providing execution to customers, running a risk book, and working on electronic trading platforms. Through my time with the latter, I grew a fondness and aptitude for building technology to solve large-scale problems. After leaving the FX markets, I joined Palantir Technologies, where I worked to solve institutional pain points by leveraging large data sets to help with decision-making.
I was then afforded the opportunity to blend these two worlds – big data and FX trading – when I joined the crypto platform Gemini. During my five years at Gemini, I had the opportunity to touch many parts of the business, including leadership roles in product, business development and trading. Before leaving to join Nasdaq, I was the Global Head of Gemini Prime, which focused on building digital asset tools for the institutional space.
Throughout my entire career, I’ve been fascinated with solving large-scale problems, and I think the digital asset (DA) space can offer some of the most transformative innovations the world has ever seen. I believe Nasdaq is uniquely positioned to be a meaningful part of that journey.
Over the past several years, we’ve witnessed the rapid growth of digital assets, from bitcoin to NFTs. What’s your outlook for digital assets within the broader capital markets?
I’m among the believers that mass institutional adoption will be the catalyst for the next evolution of the digital assets market. We are seeing the bridges between DA and traditional financial markets strengthen every day. I believe engagement with the ecosystem will increase, and we will see a lot of new and innovative solutions.
What are the gaps you see in the institutional digital asset ecosystem today?
On the product side, I see three major gaps: the security vs. access tradeoff between cold and hot wallet key management, the lack of capital efficiencies given the many execution venues for digital assets and the lack of normalized best execution.
In addition, I believe institutional adoption will accelerate once there are clear rules and regulations for the wide range of activities in the digital asset market. Given its experience, Nasdaq can be a strong partner to the many regulatory and legislative bodies actively thinking about the appropriate rules for digital assets.
You recently announced that Nasdaq Digital Assets has begun the regulatory process for a proprietary custody solution. Can you share insights on how this custody solution would fuel transparency, liquidity and integrity within the DA ecosystem?
As mentioned previously, we see the cold vs. hot wallet tradeoff as a key problem to solve for institutions. These market participants demand the best of both worlds – the highest security standards coupled with the fastest access to their assets. We are leaning on the massive amount of knowledge Nasdaq has as an organization regarding institutional requirements for operating safe and secure infrastructure and combining that with the latest cryptography tools. We will also leverage our experience as a leader in regulatory compliance to bring the product to market in a safe and effective manner.
Looking ahead, what is your one-year and five-year outlook for Nasdaq Digital Assets?
If we can develop solutions for the three gaps identified above, I think we will be in a strong position one year from now. If in five years we can look back and say we played a meaningful role in the institutional adoption of digital assets, job well done.