Institutional investors are flocking to digital assets, with regulatory clarity and innovation driving growth. As the ecosystem matures, traditional finance firms will leverage their experience to offer new investment vehicles, while digital natives will innovate more quickly.
Investor Sentiment: A Catalyst for Growth
The Rise of Digital Assets
A recent survey conducted by EY-Parthenon and Coinbase has shed light on the growing interest in digital assets among institutional investors globally. With over 350 participants, the survey provides valuable insights into their sentiment and planned adoption of digital assets.
Digital assets are intangible items that hold value, such as software, 'music' , and e-books.
They can be bought, sold, or traded online, like cryptocurrencies.
Digital assets are often stored on cloud servers or external hard drives to ensure security and accessibility.
According to a report, the global digital asset market is projected to reach $13.9 trillion by 2025, with a compound annual growth rate of 14.1%.
As technology advances, digital assets continue to play a significant role in various industries.
Regulatory Clarity: The #1 Catalyst for Growth
Regulatory clarity will play a significant role in shaping the digital assets landscape in 2025. Investors see it as the primary driver for growth, with many looking to expand their exposure to crypto through registered vehicles such as exchange-traded products (ETPs). However, there is also interest in exploring alternative options, including expanding custody services to hold spot crypto directly.
Innovation and Diversification
Institutional investors are seeking new crypto-powered products and services to generate yield, provide access to credit and lending services, conduct cross-border payments, instantly clear transactions, and grow long-term wealth. The survey highlights the importance of innovation in driving market growth, with 84% of investors using or planning to use ‘stablecoins‘.
Tokenization: Democratizing Access
Tokenization is expected to democratize access to investment options for retail investors, providing new sources of capital for institutions. The ability to diversify investments with fractional ownership and lower minimums will bring greater opportunities and improve risk management. Alternative assets such as real estate, private equity, and commodities are at the top of investors’ wish lists for tokenization.
Tokenization is the process of breaking down text into individual units called tokens.
These tokens can be words, subwords, or characters.
It's a crucial step in natural language processing (NLP) and machine learning algorithms.
Tokenization helps to simplify complex texts by identifying grammatical structures and relationships between words.
This process enables machines to understand the meaning of 'text' and perform tasks such as sentiment analysis, named entity recognition, and topic modeling.
A New Era for Digital Assets
The survey underscores the expectation that digital assets will not only move into the mainstream customer experience but also provide new opportunities to participate in a growing decentralized financial system. With a friendlier regulatory stance on crypto in the U.S., investors globally are eager to see new products and services accelerate growth in the digital assets space.
Expert Insights
Prashant Kher, Senior Director at EY-Parthenon’s Strategy group, brings extensive experience advising top asset managers, wealth managers, and private banks, investment banks, and FinTechs on digital assets strategies. His expertise spans developing growth and acquisition strategies for crypto-native firms and traditional financial firms globally.
Key Findings
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87% of investors plan to increase overall allocations to crypto in 2025.
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55% hold spot crypto through ETPs, with 69% planning to use registered vehicles.
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84% of investors are using or plan to use ‘stablecoins‘.
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More than half of investors plan on investing in tokenized assets.
Conclusion
The survey highlights the growing enthusiasm for digital assets among institutional investors. With regulatory clarity and innovation driving growth, investors are seeking new opportunities to participate in a decentralized financial system. As the ecosystem continues to mature, we can expect traditional finance firms to leverage their experience to offer new investment vehicles and products to clients, while digital natives will innovate more quickly with a friendlier regulatory backdrop.
Digital investments refer to financial assets and securities that exist in electronic form.
They include stocks, bonds, commodities, currencies, and cryptocurrencies.
With the rise of fintech, digital investing has become increasingly accessible through online platforms and mobile apps.
According to a report by Investopedia, 71% of millennials prefer digital investing due to its convenience and flexibility.
Digital investments offer benefits such as lower fees, faster transactions, and higher liquidity compared to traditional investing methods.
