Institutional investors edge towards cautious engagement with digital assets amid regulatory and product innovations

The mood among major institutional allocators toward digital assets is shifting from retreat to cautious engagement, driven as much by evolving product structures and tokenisation prospects as by changing regulatory expectations, industry participants say.

Ron Biscardi, chief executive of iConnections , which organises one of the largest capital-introduction conferences and whose platform represents more than $55 trillion of assets , described a marked change in investor behaviour since the turmoil that followed the FTX collapse. “[In 2025] we started to see funds wanting to come back, wanting to spend some money,” he said, adding that the tone at this year’s meeting had returned to something closer to normal. “I feel like what we’re seeing now at the event [this year] is a more normal experience,” he said. “It’s not extremely crazy, but it’s also not [like] ‘I don’t want to go anywhere near it.’”

iConnections recorded participation by more than 75 digital-asset funds and roughly 750 meetings between managers and allocators , activity levels comparable to the peak seen in 2022. The platform also reports that nearly one quarter of limited partners it tracks now express interest in digital-asset strategies, with family offices forming the largest cohort of enquiring investors. Sponsorship and visibility from established crypto firms such as BitGo, Galaxy Digital, Ripple and Blockstream were also pronounced at the event.

Those shifts reflect a broader institutional reassessment captured in recent industry research. According to State Street’s 2025 Digital Assets Outlook, a majority of surveyed institutions plan to increase their allocations to digital assets over the next year and expect average exposure to double within three years. The report highlights tokenisation of private markets , private equity and fixed income in particular , as the first meaningful wave of blockchain adoption, with many respondents projecting that by 2030 between 10% and 24% of portfolios could be tokenised.

For allocators managing other people’s capital, however, the path to deployment remains constrained by governance and compliance concerns. “The regulatory hurdles are number one,” Biscardi said. “It just always goes back to that.” He emphasised fiduciary responsibilities, noting: “It’s not their money, they’re fiduciaries for other people’s money, and it might be a super interesting category, but they’re just not going to allocate there until they can tell their board that they’re doing it in a responsible, safe way.”

That barrier helps explain why institutional exposure is often being implemented via regulated vehicles rather than direct token purchases. Exchange-traded funds and pooled fund structures are favoured, with general partners typically given latitude to select specific tokens. Even so, mainstream institutions are increasingly prepared to treat bitcoin and major protocols as a measured sleeve within alternatives rather than an outright speculative novelty. “Very, very close to achieving institutional legitimacy,” Biscardi said of digital-asset managers, adding that bitcoin has already crossed that threshold while altcoins are nearing it. He also observed a notable change in rhetoric: “That I don’t hear any of that anymore,” he said of earlier claims that crypto was a Ponzi-style scheme.

Risk perceptions persist. Allocators tend to view bitcoin as a risk asset correlated with equities during stressed markets rather than a dependable store of value. “Bitcoin just hasn’t behaved that way,” Biscardi said, underlining why many investors limit allocations and prioritise regulated formats and governance.

For professional capital allocators and institutional investors contemplating exposure, the convergence of product innovation , notably tokenised private markets , and clearer regulatory frameworks will be decisive. State Street’s outlook suggests that, if those elements materialise, tokenisation could unlock new sources of liquidity and allow allocators to increase digital-asset weights meaningfully within portfolios over the coming half decade. Until then, the prevailing approach among large fiduciary pools appears to be incremental adoption underpinned by strict governance, regulated instruments and careful justification to trustees and boards.