Institutions Boost Digital Asset Holdings Amid Rising Confidence
New research from State Street indicates that institutional investors plan to raise their typical digital-asset exposure from roughly 11% to 17% within the coming three years. The 2026 Digital Assets Study collected responses from 300 asset managers, owners and wealth managers worldwide. The survey also noted that allocations have already climbed from the 7% level reported in the prior year’s study.
Growing confidence and operational readiness
Confidence in the asset class becoming widely adopted has also strengthened. Fifty-one per cent of respondents expect digital assets to become mainstream within five years, if they have not already. This compared with 42 per cent in 2025 and 11 per cent in 2024, while just 3 per cent believed they would never become mainstream.
As investment in digital assets has climbed, so too has operational preparedness. Currently, 35 percent of respondents are actively handling or distributing these assets. Another 28 percent have set up partnerships and systems to meet potential client interest. Yet when choosing service providers, institutions prioritize regulatory expertise—mentioned by 69 percent—over cybersecurity (54 percent) and financial stability (47 percent).
Angus Fletcher, State Street’s head of digital asset solutions, noted that institutions spent years questioning whether digital assets held any real value. Now, he says, discussions have shifted to practical concerns. Instead of debating the technology itself, investors are concentrating on logistics, compliance, and risk management. This evolution suggests the market is developing beyond early-stage speculation.
Fund issuance and the role of digital cash
The top strategic focus for institutions is fund creation and tokenization, highlighted by 52 percent of respondents. They anticipate the biggest impact in custody services (66 percent), followed by payments (54 percent) and fund issuance (51 percent). Cost savings and operational efficiency rank as the primary benefits (53 percent), with faster transaction processing the most cited advantage (67 percent).
Digital cash is gaining prominence in institutional planning, with 45 percent calling it a key priority. The most likely near-term application is settling tokenized assets (64 percent), while bank-backed US dollar stablecoins and tokenized deposits are the favored forms of digital cash, chosen by 49 percent and 48 percent respectively.
Donna Milrod, State Street’s chief product officer, observed that while tokenized securities have drawn attention, settlement still demands reliable currency. She argues that digital cash is now central to institutional strategies. Investors recognize that digital assets and digital cash are interdependent, one cannot thrive without the other.
Only 24 per cent of respondents were already using or prepared to use digital cash, although 46 per cent expected to have the capability within the next 12 months. This gap highlights the lag between strategic interest and practical implementation. The shift toward stablecoins and tokenised deposits signals a move away from pure speculative assets toward utility-driven instruments that integrate with existing financial rails.
Distribution channels and the hybrid future
Asset managers see institutional investors as the primary driver for future growth in digital asset distribution, with 82 percent targeting this segment. Preferred channels include ETFs and conventional long-only funds, while 84 percent intend to offer tokenized versions of existing products. Artificial intelligence is considered essential or highly valuable (57 percent) for operations, particularly in smart contracts, security, and data handling.
However, expectations of a complete shift away from traditional infrastructure remained limited. Nearly one in five respondents believed a fully on-chain market would never replace the existing hybrid model. This suggests that while digital assets are entering the core of institutional strategy, the underlying financial system will continue to rely on established intermediaries and legacy frameworks.
