Institutional Investors Shift to Digital Assets: Tokenization as Strategic Move, Not Just Technical.

State Street Corporation has released its 2025 Digital Assets Outlook, revealing a significant shift in institutional investor strategies toward digital assets and tokenization. According to the firm's global research, nearly 60% of institutional investors plan to increase their allocation to digital assets within the next year, with average exposure expected to double over the next three years State Street Issues 2025 Digital Assets Outlook: Institutions Double Down on Tokenization^[1]. This trend underscores growing confidence in digital assets as a strategic component of long-term investment portfolios.

The report highlights tokenization of private markets-specifically private equity and fixed income-as the primary focus for institutional adoption. By 2030, a majority of respondents anticipate that 10–24% of their portfolios will be tokenized, enabling enhanced liquidity and operational efficiency in traditionally illiquid asset classes State Street Issues 2025 Digital Assets Outlook: Institutions Double Down on Tokenization^[1]. The benefits cited include improved transparency (52%), faster trading (39%), and reduced compliance costs (32%), with nearly half of institutions expecting cost savings exceeding 40% Majority of Institutions Expect to Double Digital Asset Exposure by ...^[2].

Operational shifts are also accelerating, with 40% of institutions now maintaining dedicated digital asset teams or business units. Donna Milrod, State Street's chief product officer, emphasized that the integration of blockchain technologies into operating models is no longer experimental but strategic: "The shift isn't just technical-it's strategic" State Street Issues 2025 Digital Assets Outlook: Institutions Double Down on Tokenization^[1]. This aligns with broader industry trends, as 32% of institutions report that blockchain operations are central to their digital transformation strategies State Street: 60% of institutional investors plan to boost Bitcoin ...^[3].

The report also notes the convergence of emerging technologies like generative AI and quantum computing with digital asset programs. While over half of respondents expect these technologies to have a greater impact on investment operations than tokenization itself, most view them as complementary tools State Street Issues 2025 Digital Assets Outlook: Institutions Double Down on Tokenization^[1]. Joerg Ambrosius, president of Investment Services at State Street, highlighted the transformative potential of this synergy: "The acceleration in adoption of emerging technologies is remarkable... digital assets are now a strategic lever for growth, efficiency, and innovation" State Street Issues 2025 Digital Assets Outlook: Institutions Double Down on Tokenization^[1].

Current institutional exposure to digital assets stands at an average of 7%, projected to rise to 16% within three years. Digital cash, tokenized equities, and fixed income dominate allocations, with 1% of portfolios currently allocated to each category Tokenized Assets Could Form Up to a Quarter of Portfolios By 2030^[4]. Cryptocurrencies remain a key driver of returns, with 27% of respondents citing Bitcoin as their top-performing asset and 21% attributing similar success to Ethereum Tokenized Assets Could Form Up to a Quarter of Portfolios By 2030^[4].

The research further reveals a divergence in adoption between asset managers and owners. Asset managers reported higher exposure to Bitcoin (14% holding 2–5% of portfolios) compared to asset owners (7%), while a small subset of managers held at least 5% in Ethereum, meme coins, or NFTs Tokenized Assets Could Form Up to a Quarter of Portfolios By 2030^[4]. This reflects varying risk appetites and underscores the growing acceptance of digital assets as a mainstream financial tool.

State Street's findings suggest a structural shift in institutional finance, with tokenization positioned to reshape capital markets. By digitizing ownership of assets like real estate and private credit, institutions could reduce settlement times, lower costs, and expand access to previously excluded investors Tokenized Assets Could Form Up to a Quarter of Portfolios By 2030^[4]. The firm's data supports the view that tokenization is not a cyclical trend but a durable transformation, with infrastructure improvements and investor confidence expected to accelerate adoption Tokenized Assets Could Form Up to a Quarter of Portfolios By 2030^[4].