The Institutional Adoption: What Has Actually Changed, and What Hasn't | EBC12

Summary

The panel described institutional adoption as two related but distinct tracks:

1. Institutions as investors—gaining exposure to crypto through ETPs/ETFs or direct custody.
2. Institutions as users of digital-asset infrastructure—using tokenization and distributed ledgers to issue, settle, transfer, or mobilize financial assets.

Progress is uneven. Institutional conversations have shifted from “Should we invest?” to “How and how much?”, while tokenization discussions have moved from theoretical possibilities toward specific operating problems. But interest and available infrastructure have not yet translated consistently into institutional deployment.

Frameworks and practical playbooks

• Separate the two adoption tracks, but look for connections. Using blockchain rails does not automatically mean investing in crypto assets; each investment case must stand on its own. However, operational familiarity with custody, wallets, compliance, and risk management could make later crypto allocations easier.
• Evaluate tokenization by the problem it solves—not by whether an asset can be tokenized. Test whether it improves distribution, reduces intermediaries or process friction, enables useful portability or collateral functions, or provides sustainable access to liquidity.
• Use a staged implementation approach:
  1. Establish legal ownership and product structure.
  2. Test specific workflows and infrastructure.
  3. Identify measurable economic value and a monetizable use case.
  4. Integrate with existing systems and counterparties.
  5. Scale only when liquidity, cash settlement, standards, and regulation support it.
• Prioritize near-term operational use cases. Panelists highlighted collateral management and mobilization as promising because faster asset transfers and financing may reduce operating steps, funding costs, and financing time.
• Act as an internal customer first. One bank described testing tokenization through its own collateral and liquidity management before rolling capabilities out to clients.
• Build networks, not isolated pilots. Fragmented platforms and liquidity undermine scale; adoption requires shared networks and end-to-end connections across issuers, custodians, transfer agents, fund administrators, and distributors.
• Treat liquidity as an underlying-market issue. Tokenization cannot make illiquid assets liquid by itself or fix weak demand, difficult valuation, or other characteristics of the underlying asset.

What is changing—and what is not

• Bitcoin is often the first institutional entry point, with ETPs attractive for smaller or tactical allocations because they offer liquidity and avoid some custody and operational burdens. Larger or more sophisticated clients may later add direct custody.
• Investor interest has broadened from Bitcoin to stablecoins and tokenization, but broader discussion has not yet produced equally broad product distribution or allocations.
• Bitcoin can be easier for some investors to assess as a store-of-value or alternative-asset allocation. Other crypto assets face more questions about valuation, scaling, liquidity, and whether network activity creates lasting value.
• Adoption still encounters slow investment-committee processes. A single objection—such as past exchange failures, adverse regulation, or quantum-computing concerns—can delay a decision for months or longer.
• Regulatory clarity is important, but it is not the only constraint. Participants also cited insufficient demand, product gaps, liquidity, fragmentation, and uncertainty about the economics of implementation.
• Europe’s fragmented regulatory and market structures remain a scaling challenge. A consistent legal framework and interoperability with legacy systems are needed for institutional deployment.

Tokenization: requirements and use cases

Panelists identified several gaps that must be addressed for tokenized securities to work at industrial scale:

• Tokenized cash: Real-time securities settlement is difficult if cash remains on a T+2 process. Potential forms include CBDCs, regulated stablecoins, and tokenized deposits.
• Liquidity: Tokenization does not create a functioning secondary market by itself; current secondary-market volumes for real-world assets remain limited.
• Integrated infrastructure and standards: End-to-end processes must connect market participants and existing systems.
• Regulatory certainty and harmonization: Institutions need clear rules across jurisdictions.
• Legal rights: Investors need to know whether a token represents a property right or security, whether it is a digital twin or a natively digital security, and which record is legally authoritative.

Collateral management was presented as a comparatively concrete use case: tokenized collateral could be transferred across infrastructures more quickly, potentially enabling financing decisions and repo execution closer to the moment funds are needed. One participant also noted that institutions may benefit from tokenized workflows without taking exposure to crypto assets.

Metrics, examples, and timelines cited

• Fidelity Digital Assets: More than 40 million US brokerage accounts can trade digital assets through Fidelity’s services.
• Bitwise: About $13 billion in client assets across products and services.
• UBS Asset Management: More than $2 trillion in AUM; launched its first tokenized money-market fund in late 2024 in Asia-Pacific and is assessing how to scale the platform and expand to other assets.
• Institutional ownership of crypto ETFs: One speaker cited an increase from approximately 24% to 36% over 1.5–2 years.
• European ETPs: One speaker reported 19 consecutive months of inflows, including during a bear market.
• Investor survey: A speaker recalled that approximately 66% of surveyed institutions used ETPs and 36% had direct custody; the figures were presented from memory and may overlap.
• Swiss bank RFPs: A bank reported participating in more than 50 institutional RFPs over 12 months, with none asking about its crypto services or tokenization capabilities. The same bank said its crypto clients were primarily private-banking customers; its average crypto investor was a man aged 30–50, and efforts to attract younger clients had not succeeded.
• Digital-asset vaults: One speaker estimated vault assets at roughly $20 billion, compared with approximately $20 trillion in ETFs, presenting a large potential growth opportunity rather than a forecast.
• ETP scaling comparison: The panel cited the first ETPs dating to 1993, taking about 15 years to reach $1 trillion and another 15 years to reach $20 trillion. A speaker cautioned that tokenization is broader and has more hurdles, so the comparison is not a direct timeline forecast.
• Scaling roadmap: A speaker cited ambitions of 10,000 transactions per second for L1 and 10 million for L2 over a multi-year period, while emphasizing execution and delay risk.
• Future indicators of adoption: Suggestions included capital being deployed without special permission, $20 trillion in storage, digital-asset references appearing in RFPs, infrastructure reaching readiness, and—qualitatively—transactions no longer being described as “DLT transactions” but simply as transactions.

Presenters and sources

• Moderator: Ariane Murphy, Head of Strategy and Operations, Stand With Crypto International.
• Martha Reyes, Fidelity Digital Assets.
• Michael Howe, Bitwise.
• Dr. Diana-Cezara Toader, UBS Asset Management.
• Peter Hubli, Zürcher Kantonalbank.
• Sladjan Seferović, digital-asset infrastructure and growth. The subtitles identify his organization as Sygnum; the video metadata lists SWIAT.