Blog

Good news has arrived from State Street’s recently published 2025 Digital Assets Outlook: institutional investors, the company notes, are ‘signalling a decisive shift in how they approach digital assets.’ 

Nearly three in five institutional investors polled say they plan to increase their allocation in the coming year, reflecting growing confidence in digital assets as a long-term investment strategy. Institutions are ‘moving beyond experimentation’ with digital assets now a ‘strategic lever for growth, efficiency, and innovation’, according to Joerg Ambrosius, State Street president of investment services. 

Alongside this, two in five institutional investors have a dedicated digital assets team. Increased transparency, cited by more than half (52%) of those polled, was the primary benefit driving adoption, ahead of faster trading (39%) and lower compliance costs (32%). 

By 2030, State Street found, a majority of respondents expect up to a quarter of institutional investments to be conducted through tokenized instruments.  

This is interesting to compare with survey data from EY at the start of the year. In the firm’s 2025 Institutional Investor Digital Assets Survey, with investors quizzed in January,  more than three quarters of surveyed investors expected to increase their allocations to digital assets in this year. Three in five said they planned to allocate over 5% of assets under management to digital assets or related products. 

While these signs are encouraging, what needs to be done to strengthen this adoption further? Upcoming sessions at Tokenize:LDN, on December 2-3 in London, will explore this emerging ecosystem. 

Regulation 

According to the EY report, the 2025 outlook reflects enthusiasm for expected regulatory clarity for digital assets. Emerging regulatory clarity was subsequently noted by institutional investors as the number one catalyst for growth. 

A report from Nethermind and PwC Germany explored the regulatory uncertainty and fragmented token standards in more detail. Jurisdictional differences remain an obstacle for global adoption; MiCAR (Markets in Crypto-Assets Regulation) is comprehensive for crypto assets in the EU but does not apply to financial assets, while MiFID II (Markets in Financial Instruments Directive) governs tokenized financial instruments. As a recent report in The Banker noted, national regulators are fiercely split on MiCAR. Token standards, such as ERC-20, ERC-1400 and ERC-3643, as well as CMTAT, have their own strengths and weaknesses. 

“As regulators and industry participants work toward standardization, the adoption of compliance-aware token standards will be crucial for enabling secure, regulated, and scalable tokenized financial products,” the report noted. 

Find out more at Tokenize : LDN: 

Bridging the RWA infrastructure gap: Overcoming scaling barriers: 03 December, 10:40

Liquidity 

Tokenization aims to create liquidity, though it is fair to say it does not guarantee it. Elliptic argues that this has failed to materialise through a few factors, from aforementioned regulatory fragmentation, to limited buyer pools, to cross-border complexity and technical risks. 

Yet the will to change appears to be there. According to State Street, private equity and private fixed income are expected to be the first asset classes to undergo tokenization, reflecting a ‘strategic focus among institutional investors’ on unlocking liquidity in traditionally illiquid markets.  

More than a third (34%) of those polled by EY cited greater liquidity as a top three reason for their firm to invest in tokenized assets.  When it came to asset managers, increased liquidity was cited by more than half (51%) of respondents for interest in tokenizing their own assets. 

Stablecoins are another example of how liquidity can be improved. It has been a very exciting year for stablecoins, with the passing of the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) in the US a major legislative breakthrough. Goldman Sachs has called it the ‘summer of stablecoins.’ 

The EV survey found 84% of institutional respondents either use or express interest in stablecoins. Transactional convenience when trading other digital assets was cited as a key use case by 71% of respondents, behind only yield.  

“Far from speculative, investors see stablecoins as the vehicle to deliver on digital assets’ promise to reduce transaction cost and provide instant settlement,” the report notes, alongside “provid[ing] greater access, with lower minimum capital commitments, to alternative investment vehicles including private equity, private credit and real estate.” 

Find out more at Tokenize : LDN: 

How can stablecoins improve liquidity for other tokenized assets? 03 December, 12:15 
Tackling challenges around RWA liquidity: 03 December, 12:40