Institutional adoption of digital assets — like bitcoin — is booming, with average portfolio exposure expected to double from 7% to 16% within three years, according to new research from State Street.
State Street’s study touched on how tokenization and blockchain technology are moving from experimentation to execution across global investment portfolios.
The study surveyed senior executives across asset management, trying to decipher how institutions are integrating digital assets, tokenization, and emerging technologies like AI and quantum computing into their strategies.
Nearly 60% of respondents plan to increase digital asset allocations over the next year, while most expect exposure to double by 2028.
“Institutional investors are moving beyond experimentation — digital assets are now a strategic lever for growth, efficiency, and innovation,” said Joerg Ambrosius, president of Investment Services at State Street.
Tokenization is leading the shift
The first wave of tokenization is expected to occur in private equity and private fixed income, areas that have historically been illiquid and opaque.
By 2030, more than half of institutions expect between 10% and 24% of total investments to be executed through tokenized instruments, the survey found.
Tokenization — the process of issuing blockchain-based representations of real-world assets — allows fractional ownership, faster settlement, and improved transparency.
State Street’s research shows that 52% of respondents see tokenization transparency as the top benefit, followed by faster trading (39%) and lower compliance costs (32%).
Nearly half believe these efficiencies could translate into cost savings exceeding 40%.
Dedicated crypto teams are emerging
As adoption deepens, digital assets are being embedded into business operations.
Four in ten institutions now have dedicated digital asset units, and nearly one-third have integrated blockchain operations into their overall digital transformation strategy. Another 20% said they plan to follow suit.
Donna Milrod, State Street’s chief product officer, said clients are “rewiring their operating models around digital assets,” pointing to projects spanning tokenized bonds, equities, stablecoins, and central bank digital currencies.
Crypto still drives returns
Despite growing institutional attention to tokenized assets, crypto remains the primary driver of digital asset returns.
About 27% of respondents said Bitcoin currently generates the highest returns in their digital portfolios, with 25% expecting it to remain a top performer over the next three years.
Stablecoins and tokenized real-world assets account for the largest portion of institutional digital holdings, but traditional cryptocurrencies continue to dominate the profit picture.
State Street warned that while digital assets are becoming mainstream, institutions are cautious about the pace of change.
Only 1% of respondents believe most investments will be made through tokenized assets by 2030, but the majority expect steady progress as infrastructure and regulation mature.
“Institutional confidence in digital assets is no longer theoretical,” Ambrosius said. “It’s operational.”
