Institutional investors are showing a growing interest in cryptocurrency, with a recent survey revealing that 83% of them are planning to increase their allocations in digital assets this year. The survey, conducted by Coinbase and EY-Parthenon, polled 352 institutional decision-makers in January and found that confidence in cryptocurrencies is on the rise as regulatory clarity improves and new use cases emerge.
A majority of respondents (59%) are planning to allocate more than 5% of their assets under management (AUM) to crypto by 2025, indicating a shift from viewing cryptocurrency as a niche investment to an essential component of their portfolios. This trend comes on the heels of a successful 2024 for the crypto market, marked by increased adoption of stablecoins, decentralized finance (DeFi), and tokenized assets.
Stablecoins are gaining popularity among institutional investors, with 84% of those surveyed either using or considering them for various purposes beyond transactions. Yield generation, foreign exchange, and internal cash management were cited as key drivers of adoption. While DeFi is still in its early stages of institutional engagement, the survey predicts a significant growth in this sector, with the number of investors involved in DeFi expected to triple to 75% by 2027.
In addition to Bitcoin and Ethereum, alternative cryptocurrencies are also gaining traction in institutional portfolios, with 73% of respondents holding at least one altcoin. XRP and Solana were among the most commonly held altcoins, and 68% of investors expressed interest in exchange-traded products (ETPs) offering single-asset exposure to these digital assets.
Despite the growing optimism surrounding cryptocurrency, regulatory uncertainty remains a major concern for institutional investors. More than half of the surveyed investors identified regulation as their top concern, followed by volatility and custody security. However, 68% of them believe that clearer regulations will drive the next wave of institutional adoption in the crypto space.
Overall, the survey highlights a continued shift towards digital assets among institutional investors, with increasing allocations, diverse use cases, and expanding product engagement. While challenges such as regulatory developments and market fluctuations may pose obstacles, the overall trajectory suggests sustained momentum for cryptocurrency in institutional portfolios.