Regulatory Clarity Drives Institutional Investment in Digital Assets

Institutional investors are taking a more cautious approach to digital assets as regulatory clarity improves.

A report from EY-Parthenon and Coinbase found that three quarters of surveyed investors plan to increase their digital asset allocations this year, with a significant portion planning for these investments to comprise more than 5% of their portfolio.

The majority of respondents prefer registered funds over direct investment, with 81% opting for the former in contrast to 60% last year.

Prashant Kher, digital assets strategy and transactions leader at EY-Parthenon, attributed the increase in investment to the executive orders and GENIUS Act introduced after the 2024 election. He noted that investors are looking for clearer market structure, tax treatment, and licensing of digital asset companies.

The recent price volatility of assets like bitcoin has reinforced a more disciplined approach among investors, who continue to seek the potential innovation and diversification offered by digital assets, including stablecoins and tokenization.