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Digital assets are here to stay; State Street survey reveals continued institutional interest

Thu, 12 Dec 2019, 06:38 am UTC

A new survey of US asset managers and asset owners conducted by State Street forecasts the continued prevalence of digital assets in the industry.

According to survey results, only 6% of survey respondents said that they have no digital assets-related investments and no plans to invest in the next year.

38% of respondents said they will increase their allocation, while 45% plan to continue with the same allocation. Importantly, more than two-thirds (69%) of the largest firms plan to boost allocations of this emerging asset class, signifying growing institutional interest in digital assets.

Furthermore, 45% of respondents expect a bitcoin ETF (or other cryptocurrency ETF) to receive regulatory approval and launch in 2020.

Speaking of tokenization of traditional assets, 45% said that this will be “massive disruption” to the market within the next five years. As for the benefits of tokenization, 62% cited improvement of risk management, 55% said transparency, 55% said enhanced security, 36% cited democratization of investing for retail investors.

However, a majority (55%) believe that the inherent risks with tokenized assets are too great for widespread institutional adoption. Only 4% of respondents do not see any benefits from tokenization.

Blockchain and Distributed Ledger Technology (DLT)

Survey respondents cited blockchain/DLT (62%) and AI/machine learning (50%) among the top priority while discussing trading technology upgrades planned for their organizations in 2020.

65% of respondents believe that DLT will improve financing solutions in the future and 59% said the same about AI.

State Street recently made headlines as it let go of most of its developers in its blockchain strategy team. Reports suggest the custodian bank has axed over 100 blockchain developers as it plans to move away from the in-house DLT initiative.

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