The increasing prevalence of tokenization in asset management practices

The increasing prevalence of tokenization in asset management practices

In a significant shift towards mainstream adoption, institutional investors are increasingly integrating crypto assets and tokenised funds into their core portfolios. This trend, which is gaining momentum in 2025, sees asset managers, pension funds, hedge funds, and governments moving beyond speculative involvement.

The surge in institutional interest is driven by several key factors. Rising capital inflows, regulatory clarity, and product innovation are all contributing to the growth. Crypto funds reached all-time highs in May 2025, with Bitcoin funds alone attracting $5.5 billion in net inflows that month. By early 2025, 86% of surveyed institutional investors had some exposure or plans to allocate to digital assets, and 59% intended to allocate more than 5% of their assets under management to crypto.

Tokenised funds, which enable fractional ownership of assets, are also gaining traction. Research indicates that tokenised funds will likely become mainstream within three to five years. In Luxembourg, for example, 53% of investors currently use digital assets, with an additional 32% interested in adoption, and over half intend to increase digital asset allocations.

Regulatory clarity has been a pivotal factor in this shift. Positive shifts include the US appointing crypto-friendly regulators, repealing restrictions on banks holding digital assets, and establishing federal working groups. Globally, the EU’s MiCA regulations and similar frameworks in Hong Kong and Singapore provide legal certainty that gives institutions confidence to participate.

Product innovation around tokenisation and ETFs is another driving force. Institutional investors can access digital assets not only through direct holdings but also via Bitcoin ETFs, tokenised asset platforms, and regulated stablecoins like USDC. Partnerships between major financial players, such as Visa with Circle, are integrating tokenized assets into broader financial infrastructure, further supporting adoption.

Focus on diversified, automated investment vehicles is also on the rise. Crypto indices and AI-powered strategies are gaining popularity among institutional and sophisticated investors to efficiently diversify risk and gain exposure to key trends like DeFi and real-world assets.

Laurent Majchrzak, Global Head Digital Assets at CACEIS, acknowledges the need for clarity on current regulations regarding digital assets. He believes that the interplay between various EU legislative texts is sometimes a source of confusion. CACEIS proposes redefining the cash component in investment funds EU legislation to include Electronic Money Tokens (EMTs), Central Bank Digital Currencies (CBDCs), and tokenised commercial bank money.

Security considerations, including the analysis and audit of smart contracts, are a high priority for CACEIS in the context of tokenisation. Respondents overwhelmingly favoured private blockchain networks over public ones, citing greater security, governance, and control. Stable coins such as EMTs are important for asset managers if they are to implement atomic settlement with instant transactions.

Despite the growing demand, regulatory uncertainty remains a hurdle. However, asset managers who do not yet offer tokenised funds are optimistic about their future adoption, with nearly 62% expecting to launch such offerings within the next one to five years. The latest Funds Europe Digital Assets Survey gathered insights from 107 respondents across the financial industry, providing valuable insights into this evolving landscape.

In summary, institutional interest in tokenised funds and crypto assets in 2025 is soaring, driven by regulatory clarity, innovative financial products, and increasing acceptance of digital and tokenised assets as integral parts of diversified portfolios. This momentum is transforming crypto from a niche experiment into a foundational component of modern asset management.

1. Asset managers, such as CACEIS, are focusing on the need for regulatory clarity, particularly in the cash component of investment funds, to include Electronic Money Tokens (EMTs), Central Bank Digital Currencies (CBDCs), and tokenised commercial bank money, in order to support the growth of tokenised funds.
2. Innovative financial products, including Bitcoin ETFs, tokenised asset platforms, and regulated stablecoins like USDC, are helping institutional investors access and invest in digital assets, further fueling the mainstream adoption of crypto assets in asset servicing and asset management industries.
3. Security considerations, particularly the analysis and audit of smart contracts, are critical for asset managers like CACEIS in the context of tokenisation, with respondents overwhelmingly preferring private blockchain networks for their enhanced security, governance, and control.

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