Interest in digital assets among institutional investors is rapidly growing, according to newly released State Street research. The study found that the share of digital assets like Bitcoin in institutional portfolios is expected to rise from an average of 7% to 16% over the next three years.
The study noted that tokenization and blockchain technologies have moved from the experimental phase to the implementation phase in global investment portfolios. The survey included senior executives from the asset management sector and assessed how institutions are integrating new technologies such as digital assets, tokenization, artificial intelligence, and quantum computing.
While 60% of respondents plan to increase their digital asset allocations in the coming year, the vast majority predict that this percentage will double by 2028.
Joerg Ambrosius, President of State Street Investment Services, commented on the situation:
“Institutional investors are now past the trial phase, digital assets are now a strategic lever for growth, efficiency and innovation.”
According to the research, the first wave of tokenization will occur in private equity and private fixed‑income securities, areas that have historically been less liquid and transparent.
More than half of institutions anticipate that 10% to 24% of their investments will be made through tokenized instruments by 2030. With tokenization, assets can be represented on the blockchain, enabling divisible ownership, faster reconciliation, and increased transparency.
52% of respondents cited transparency, 39% cited processing speed, and 32% cited reduced compliance costs as top benefits. Nearly half said these efficiencies could result in cost savings of more than 40%.
Donna Milrod, Director of Product at State Street, said clients are “restructuring their operational models around digital assets,” highlighting projects focused on tokenized bonds, stocks, stablecoins, and central bank digital currencies (CBDCs).
While institutional interest in tokenized assets is growing, cryptocurrencies still remain a primary source of digital portfolio returns.
Twenty‑seven percent of respondents indicated that Bitcoin provides the highest returns, while 25% indicated that it will continue to be the best‑performing asset over the next three years. While stablecoins and tokenized real‑world assets (RWA) make up the majority of institutional portfolios, Bitcoin and other cryptocurrencies stand out in terms of profitability.
*This is not investment advice.