A recent survey conducted by Coinbase (NASDAQ:COIN) and EY-Parthenon reveals a significant shift in the investment strategies of institutional investors in the European Union (EU) and the United Kingdom (UK), with a strong inclination toward increasing allocations to digital assets in 2025.
The study, conducted recently with responses from 352 institutional firms globally, including approximately 100 from the EU and UK, highlights growing optimism about cryptocurrencies and their role in institutional portfolios.
This surge in interest reflects a maturing crypto market, evolving use cases, and expectations of greater regulatory clarity, positioning digital assets as a mainstream investment class.
The survey’s most striking finding is that 83% of institutional investors plan to increase their crypto allocations in 2025, driven by the belief that cryptocurrencies offer the best opportunity for attractive risk-adjusted returns over the next three years.
Notably, 59% of respondents intend to allocate more than 5% of their assets under management (AUM) to digital assets, a significant jump from the typical 2-3% considered standard in prior years.
This shift underscores the growing acceptance of crypto as a core component of diversified portfolios, moving beyond its earlier perception as a niche or speculative asset.
The data suggests that 86% of surveyed institutions already have exposure to digital assets or plan to invest in 2025, signaling robust confidence in the sector’s long-term potential.
Stablecoins, in particular, are gaining traction for their versatility.
The survey indicates that 84% of institutional investors are either currently using stablecoins or are interested in doing so, with 42% already holding or utilizing them and 34% expressing future interest.
Beyond facilitating crypto transactions, stablecoins are being explored for diverse applications, including generating yield (73%), foreign exchange (69%), internal cash management (68%), and external payments (63%).
This broadening of use cases highlights stablecoins’ growing utility in institutional financial strategies, offering stability and efficiency in a volatile market.
Additionally, 98% of respondents expressed interest in tokenized assets, such as bonds, stocks, and funds, with EU and UK investors showing a stronger preference for tokenized commodities like gold and oil (56%) compared to their US counterparts (36%).
Although only 13% have invested in tokenized assets to date, 69% plan to do so by 2026, driven by goals of portfolio diversification and enhanced portfolio construction.
Despite this enthusiasm, challenges remain.
The survey identifies regulatory uncertainty as the top concern for 52% of investors, followed by market volatility (47%) and secure custody (33%).
However, 68% of respondents believe that greater regulatory clarity will be the primary catalyst for the digital asset industry’s growth.
The EU’s Markets in Crypto-Assets (MiCA) regulation, already in place, is seen as a positive step, fostering a more predictable environment for institutional participation.
Investors anticipate that clearer regulations, particularly around custody, will unlock new opportunities and further legitimize the crypto market.
The survey also points to growing engagement with decentralized finance (DeFi) and altcoins.
Institutional investors are expected to increase DeFi participation by 2.5 times over the next two years, reflecting confidence in the maturing infrastructure of decentralized protocols.
Additionally, institutions are selectively increasing their exposure to altcoins, diversifying beyond Bitcoin and Ethereum to capture emerging opportunities in the crypto ecosystem.
The introduction of exchange-traded products (ETPs) for Bitcoin and Ethereum has further broadened market participation, making it easier for institutions to gain exposure through regulated financial products, with 57% preferring this route.
While the outlook is overwhelmingly positive, the survey acknowledges that crypto markets are not immune to macroeconomic and geopolitical forces.
Volatility in the first quarter of 2025 serves as a reminder of the asset class’s inherent risks.
Nonetheless, the data reflect a resilient and maturing market, with institutional investors taking a long-term view.
The combination of increasing allocations, expanding use cases, and anticipation of regulatory advancements positions the EU and UK as key players in the global crypto economy.
As Coinbase and EY-Parthenon’s research suggests, 2025 could mark a pivotal year for institutional adoption, cementing digital assets as a cornerstone of modern investment strategies.