EY-Parthenon and Coinbase conducted a survey of more than 350 institutional investors globally in January of 2025. While regulatory clarity will loom large over developments in the digital assets landscape in 2025 — investors in the survey called it the #1 catalyst for growth — the survey illustrated underlying enthusiasm and an appetite for innovation that will drive the market forward. Both institutional and retail investors are seeking new crypto-powered products and services to generate yield, provide access to credit and lending services, conduct cross-border payments, instantly clear transactions and grow long-term wealth.
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As the ecosystem matures and continues to take shape, we will see traditional finance (TradFi) firms leverage decades of experience and reputations to securely offer new investment vehicles and products to clients. A friendlier regulatory backdrop will enable digital natives to innovate more quickly, pushing decentralized finance use cases forward by catering to both progressive clients and a new generation of financial customers.
STORY CONTINUES BELOW
Of investors surveyed, 87% plan to increase overall allocations to crypto in 2025, spanning a variety of options such as exchange-traded products (ETPs), investments in digital asset companies, stablecoins, futures and thematic mutual funds. While many said they prefer to get their exposure to crypto through registered vehicles such as ETPs, there’s also interest in expanding custody services to offer and hold spot crypto directly. Per the survey, 55% hold spot crypto through ETPs, with 69% of those who plan to own spot crypto planning to do so using registered vehicles. Earlier in 2024, some of the bitcoin ETPs became the fastest growing ETPs across a spectrum of altcoins, including solana (SOL) and ripple (XRP).
Institutional investors look to opportunities to power new payment platforms and enjoy rewards through staking and yield generation. Eighty-four percent of investors surveyed said they are using or plan to use stablecoins, with Tether (USDT) and USD Coin (USDC) being the top two preferred coins. Stablecoins promise to make clearing instantaneous, modernizing and reducing risk in foreign currency exchange, cash management and a host of other use cases.
Tokenization further promises to democratize access to investment options for the retail investor and provide new sources of capital for institutions. More than half of investors surveyed plan on investing in tokenized assets. The ability to diversify investments with a greater level of precision with fractional ownership and lower minimums will bring greater opportunities and improve risk management. At the top of investors’ wish list for tokenization are alternative assets such as real estate, private equity, private credit and even commodities such as gold and oil. These are investments typically reserved for institutions or ultra high net worth clients, which through tokenization can be available to new retail investors.
Innovation has always driven Wall Street forward. There is an expectation from investors that digital assets will not only move into the sphere of mainstream customer experience, but also provide new opportunities to participate in a growing decentralized financial system. Anchored with the backdrop of a friendlier regulatory stance on crypto in the U.S., investors globally expect new products and services to accelerate a renaissance in digital assets.
Note: The views reflected in this article are the views of the author(s) and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.