Institutional investors are increasingly bullish on cryptocurrency, with 83% planning to expand their allocations this year, according to a new survey conducted by Coinbase and EY-Parthenon.

The research, which polled 352 institutional decision-makers in January, found growing confidence in digital assets as regulatory clarity improves and broader use cases emerge.

A majority (59%) of respondents intend to allocate more than 5% of their assets under management (AUM) to crypto in 2025, signaling its shift from a niche investment to a key portfolio component.

This trend follows a strong 2024 for the crypto market, with rising adoption of stablecoins, decentralized finance (DeFi), and tokenized assets.

Stablecoins and DeFi

Stablecoins continue to gain institutional favor, with 84% of surveyed investors currently using or considering them for various purposes beyond transactions.

Yield generation (73%), foreign exchange (69%), and internal cash management (68%) were cited as key drivers of adoption.

DeFi, while still in its early stages of institutional engagement, is set for significant growth. Currently, only 24% of investors are involved in DeFi, but that figure is expected to triple to 75% by 2027.

Institutional investors are particularly interested in DeFi derivatives, staking, and lending products, highlighting its potential to disrupt traditional financial services.

While Bitcoin (BTC) and Ethereum (ETH) continue to dominate institutional portfolios, 73% of respondents reported holding at least one alternative cryptocurrency.

XRP and Solana (SOL) were the most commonly held altcoins. Additionally, 68% of investors expressed interest in exchange-traded products (ETPs) offering single-asset exposure to these digital assets.

Regulatory clarity is growth catalyst

Despite optimism, regulatory uncertainty remains a significant challenge.

More than half (52%) of surveyed investors identified regulation as their top concern, followed by volatility (47%) and custody security (33%).

However, 68% believe that greater regulatory clarity will drive the next wave of institutional crypto adoption.

The report highlighted a continued shift toward digital assets among institutional players, with increasing allocations, diverse use cases, and expanding product engagement.

While regulatory developments and market fluctuations may introduce hurdles, the overall trajectory suggests sustained momentum for crypto in institutional portfolios.

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