Tokenization Shifts from Experiment to Core Institutional Infrastructure, State Street Reports

State Street Corporation has projected that institutional investors will double their exposure to digital assets within three years, with over half anticipating that 10–24% of their investments will be tokenized by 2030. This forecast is based on the firm's 2025 Digital Assets Outlook, derived from a global survey of 324 senior executives in asset management and ownership. The report highlights a strategic shift in institutional finance, with tokenization transitioning from experimentation to core operational frameworks.

Private markets, particularly private equity and fixed income, are identified as the first major asset classes to undergo tokenization. These sectors account for a significant portion of institutional portfolios and are expected to leverage blockchain technology to enhance liquidity, reduce settlement times, and lower operational costs. By 2030, 58% of surveyed institutions plan to allocate 10–24% of their total investments to tokenized assets, reflecting confidence in the scalability of blockchain-based solutions.

Transparency and efficiency are central to the adoption drive. Over half of respondents cited increased visibility as the primary benefit of tokenization, followed by faster trading (39%) and reduced compliance costs (32%). Some institutions anticipate cost savings exceeding 40% through transparency-driven efficiencies. The report also notes that 40% of institutional investors already have dedicated digital asset teams, with an additional 20% planning to establish such divisions. These teams are reshaping operational models, integrating tokenized bonds, stablecoins, and central bank digital currencies (CBDCs) into core strategies.

Strategic partnerships and technological convergence are accelerating adoption. Joerg Ambrosius, president of Investment Services at State Street, emphasized that tokenization, AI, and quantum computing are collectively driving innovation in finance. Donna Milrod, chief product officer, added that clients are "rewiring" operations to integrate digital assets, with nearly one in five institutions planning to formalize blockchain divisions. The report underscores that tokenization is no longer a speculative endeavor but a foundational element of institutional investment management.

Regulatory clarity and infrastructure development remain critical enablers. While challenges such as interoperability between blockchain networks and legacy systems persist, institutions are prioritizing near-term opportunities in high-impact areas like private credit and real-world asset tokenization. The report also highlights the role of cross-border initiatives, such as Singapore's Project Guardian and the UAE's tokenized real estate projects, in fostering global collaboration.

The 2025 Outlook concludes that tokenization is reshaping the institutional landscape, with private markets leading the charge. As firms scale their digital capabilities, the report anticipates a compounding effect: early adopters will gain competitive advantages through operational efficiency, liquidity access, and strategic innovation. The findings position tokenization as a cornerstone of the next decade's financial infrastructure, with State Street advocating for proactive integration to capitalize on emerging opportunities.