Rising allocations, broadening use cases: New research from EY-Parthenon and Coinbase finds that 83% of institutional investors plan to increase their exposure to crypto this year

Institutional investors are increasingly optimistic about crypto in 2025. That’s the sentiment expressed in a global survey of decision-makers at 352 firms, conducted by Coinbase and EY-Parthenon in January.

After a landmark 2024, crypto entered the new year with strong momentum, and surveyed investors are confident about the future. In addition to their conviction that crypto continues to offer attractive investment returns, investors are confident in the future prospects for stablecoins, DeFi, tokenization, and more. Notably, a significant majority of surveyed investors plan to allocate more than 5% of their AUM to crypto in 2025, a clear sign that it is moving beyond a niche asset class.

Increased investor interest is driven in part by the belief that greater regulatory clarity will be the catalyst that unlocks a new wave of opportunities in digital assets, particularly with regard to custody. At the same time, the still-developing regulatory landscape is viewed as one of the main challenges facing the industry.

Below are some of the key insights from the survey*; the full results are available here.

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Allocations are set to rise

An overwhelming majority (83%) of surveyed investors plan to increase their allocations to crypto in 2025, driven by their view that cryptocurrencies represent the best opportunity to generate attractive risk-adjusted returns over the next three years. A clear majority (59%) of surveyed investors plan to allocate more than 5% of their AUM to crypto in 2025 as the asset class further cements its role in institutional portfolios.

Broad use cases are driving growing interest in stablecoins

Given stablecoins’ remarkable growth, it’s little surprise that 84% of surveyed investors are either using them currently or are interested in doing so. What may be underappreciated is the breadth of use cases for stablecoins. Significant majorities of investors are using, or are interested in using, stablecoins for a variety of use cases beyond just facilitating crypto transactions, including generating yield (73%), foreign exchange (69%), internal cash management (68%), and external payments (63%).

Institutions are engaging with a select group of altcoins

Almost three-quarters (73%) of surveyed investors indicated that their firms currently hold cryptocurrencies besides bitcoin and ethereum. It should be noted, however, that most investors hold just one or two altcoins, with Ripple (XRP) and Solana (SOL) being the most common. Investors also signaled their interest in accessing altcoins via ETPs, with 68% indicating that they would be likely to purchase single-asset ETPs for altcoins such as SOL and XRP.

DeFi is poised for significant growth

While only 24% of surveyed investors currently engage with DeFi, that figure is set to triple to 75% in just two years. Institutions are attracted to DeFi for myriad reasons, citing derivatives, staking, and lending as the use cases they are most interested in, followed closely by access to altcoins, crossborder settlements, and yield farming.

Amid widespread optimism, challenges remain

While surveyed investors are overwhelmingly positive on the outlook for crypto, there are still notable areas of concern. Chief among these is the developing regulatory outlook, which was cited as the top concern by 52% of investors, followed by volatility (47%) and secure custody (33%). As the regulatory picture becomes more clear, the crypto economy is likely to expand: 68% of investors cited greater regularity clarity as the next catalyst for growth of the digital-asset industry.

Looking ahead

The survey results clearly point to institutions deepening their engagement with crypto in 2025. From making larger allocations, to increasing use cases, to engaging with new products, all signs indicate positive momentum.

Of course, progress never takes place in a straight line, and setbacks are inevitable on the march forward. The volatility we’ve seen in the first quarter is a reminder that markets can get ahead of themselves, and that crypto is not immune to the forces shaping the macroeconomic landscape or the shifting tides of geopolitics.

Nonetheless, we firmly believe that the future is bright for crypto, and that institutional investors’ optimism will prove to be well-founded.

Note:

* As of January 2025, 86% of surveyed institutional investors have exposure to digital assets, or plan to make digital asset allocations in 2025. The data presented above represents specific plans, trends, and sentiments of this group of investors.