Enthusiasm grows for digital assets as increased utility expands the ecosystem

Institutional investors globally increased their allocations to digital assets this past year and intend to continue to do so throughout 2025. Building on the momentum from the introduction of crypto exchange traded products (ETPs) for Bitcoin (BTC) and Ethereum (ETH) early in the year, 2024 was a year of growth for crypto. The outlook for 2025 reflects enthusiasm for both increased utility and expected regulatory clarity for digital assets. Combined with an appetite for innovation in the areas of stablecoins, decentralized finance (DeFi) and tokenization, the industry appears to be on the cusp of broad institutional support to enhance our financial system with faster settlement, the democratization of access to alternative assets, and increased transactional convenience. There are substantive reasons to believe in this bull cycle. The market is more mature and resilient, the introduction of ETPs for Bitcoin and Ethereum and other products has expanded market participation, and there is a positive outlook on the evolving regulatory environment across the US, EU and the globe. The underlying technology has also progressed in the past several years: Use cases have evolved, and transaction costs and speeds have become more compelling. With this as a backdrop, Coinbase and EY-Parthenon practice conducted a survey of more than 350 institutional investors across the world on their sentiment, investment plans and usage around digital assets. Conducted in January 2025, post-election, but prior to the digital asset executive order, the survey reflects an institutional investor base that is ready to build on an already strong foundation and prepared to both broaden participation and expand allocations as a global regulatory framework becomes clearer.

More than three-quarters of surveyed investors expect to increase their allocations to digital assets in 2025, with 59% planning to allocate over 5% of assets under management to digital assets or related products. Looking forward, surveyed investors noted regulatory clarity as the #1 catalyst for growth in digital assets. Interest in stablecoins and tokenized assets is also increasing. Seeking yield, transactional convenience, and an efficient means to facilitate foreign exchange, 84% of institutions are either already utilizing or expressing interest in utilizing stablecoins. Driven predominantly by goals of portfolio diversification, 76% of firms intend to invest in some form of tokenized assets by 2026. We also expect to see institutional investors increase core allocations, expand their holding of altcoins, start to engage more in DeFi, explore the availability of tokenized alternative assets, and leverage stablecoins for both yield and transactional convenience. While momentum continues, markets will keep an eye on news coming out of the President s Working Group on Digital Asset Markets as well as Senate and House subcommittees on digital assets, watching for both detail and intent as they sort through current rules and bring forward new regulations. Investors in Europe will look to see how EU governing bodies, seeking to balance stability, consumer protection, and innovation, react to the positive tone struck by development in the US.