QUICK TAKE:

• Significant Exposure: Nearly 60% of Asian institutional investors have ventured into digital assets in the past year.
• Increasing Positions: Almost 40% plan to enhance their crypto exposure in 2024, with 25% aiming for substantial increases.
• Tokenized Real Estate: High interest in tokenizing real-world assets, particularly real estate.
• Growing Recognition: Digital assets are becoming vital for diversifying investment portfolios.

In a recent survey by SBI Digital Assets Holdings, a subsidiary of Japanese asset manager SBI Holdings, it was revealed that the majority of Asian institutional investors have already embraced digital assets. Nearly 60% of these investors have gained exposure to cryptocurrencies or other digital assets in the last year. This trend is indicative of a growing recognition of the importance of digital assets in diversifying investment portfolios.

Interestingly, the survey found that nearly 40% of these institutions are looking to increase their exposure to digital assets in 2024. Additionally, 25% of respondents are planning “significant increases” in their holdings. This shows a strong bullish sentiment towards digital assets among Asian institutional investors. Conversely, only 15% of the surveyed institutions have no plans to invest or transact in digital assets.

The areas of interest among these investors are diverse. While 67% of the institutions involved in digital assets are most engaged with cryptocurrencies, 33% believe that central bank digital currencies (CBDCs) will see the highest adoption within the next three years. This prediction aligns with global trends where several central banks are exploring or piloting their own digital currencies.

Another area of keen interest is the tokenization of real-world assets. The survey found that almost 62% of institutions reported that their clients have shown demand for tokenized securities. When asked about the types of assets they prioritize for tokenization, 40% of institutions highlighted real estate as their top choice. Other assets mentioned include funds and physical infrastructure (14% each), bonds and collectibles such as artwork (10% each), with the remainder divided between equities and precious metals.

The benefits of tokenizing real-world assets are manifold. Nearly half of the survey participants cited reduced intermediaries as the primary advantage. This is followed by faster settlement times, cost efficiency, enhanced transparency, and increased liquidity. These benefits are driving the interest in tokenization as institutions look for ways to modernize and streamline their investment strategies.

However, the path to broader adoption is not without challenges. The survey identified several barriers that institutions face when dealing with digital assets. The most significant obstacle, noted by 60% of respondents, is the “lack of a trusted ecosystem to take transactions from end-to-end.” This indicates a concern that the current infrastructure for digital assets is not yet robust or reliable enough for large-scale institutional use.

Cyberthreats were another concern, although less pressing, with only 20% of institutions viewing them as the biggest danger. This is a notable decrease in concern compared to previous years, suggesting improvements in cybersecurity measures within the digital asset space. Meanwhile, 18% of respondents pointed to the lack of regulatory clarity as a significant hurdle. The evolving and often fragmented regulatory landscape can create uncertainty and impede the willingness of institutions to fully commit to digital asset investments.

Overall, the survey by SBI Digital Assets Holdings highlights a dynamic and evolving landscape for digital assets in Asia. The increasing interest and planned investments by institutional players underscore the growing acceptance and integration of digital assets into mainstream finance. As the infrastructure matures and regulatory frameworks become clearer, it is likely that more institutions will follow suit, further cementing the role of digital assets in global financial markets.