Institutional adoption of digital assets such as Bitcoin is proceeding rapidly, with average portfolio exposure expected to double from 7% to 16% within three years, according to new research from State Street.
State Street research touches on how tokenization and blockchain technologies are moving from experimentation to implementation across global investment portfolios.
The study surveyed senior executives in the asset management sector to decipher how financial institutions are integrating digital assets, tokenization, and emerging technologies such as AI and quantum computing into their strategies.
Nearly 60% of respondents plan to increase their digital asset allocation over the next year, with the majority expecting to double their exposure by 2028.
“Institutional investors have moved beyond experimentation, and digital assets are now a strategic vehicle for growth, efficiency, and innovation,” said Jorg Ambrosius, president of investment services at State Street.
Tokenization leads the change
The first wave of tokenization is expected to occur in the private equity and private debt sectors, which have historically been illiquid and opaque.
According to the survey, by 2030, more than half of institutions expect between 10% and 24% of their total investments to be carried out through tokenized products.
Tokenization, the process of issuing blockchain-based representations of real-world assets, enables fractional ownership, faster settlement, and increased transparency.
According to a State Street survey, 52% of respondents believe transparency is the biggest benefit of tokenization, followed by faster transactions (39%) and lower compliance costs (32%).
Nearly half believe these efficiencies could lead to cost savings of more than 40%.
A virtual currency specialist team is emerging
As adoption increases, digital assets are being integrated into business operations.
Four in 10 institutions now have a dedicated digital asset unit, and almost a third have integrated blockchain operations into their overall digital transformation strategy. A further 20% said they had similar plans.
Donna Milrod, State Street’s chief product officer, said clients are “rewiring their operating models around digital assets,” pointing to projects across tokenized bonds, equities, stablecoins and central bank digital currencies.
Cryptocurrency still drives profits
Despite increasing institutional attention towards tokenized assets, cryptocurrencies remain the main driver of digital asset returns.
About 27% of respondents said Bitcoin currently generates the highest returns in their digital portfolio, and 25% expect it to remain the top performer over the next three years.
While stablecoins and tokenized real-world assets make up the bulk of institutional investors’ digital holdings, traditional cryptocurrencies continue to dominate the overall picture of returns.
State Street warned that while digital assets are becoming mainstream, institutions are being cautious about the pace of change.
Only 1% of respondents believe that most investments will be made through tokenized assets by 2030, but the majority expect steady progress as infrastructure and regulations mature.
“Institutional trust in digital assets is no longer theoretical,” Ambrosius said. “It’s up and running.”
Source: https://bitcoinmagazine.com/business/institutions-plan-to-double-bitcoin-and-crypto-exposure-by-2028-state-street-research-finds
