Blockchain, AI Drive Institutional Investment Shift Despite DeFi Skepticism
Institutional investors are significantly expanding exposure to digital assets, with average allocations expected to more than double from 7% today to 16% by 2028, according to a new global survey conducted by State Street in collaboration with Oxford Economics.
The findings highlight a broader institutional push into blockchain and artificial intelligence (AI) — two technologies now seen as foundational to long-term digital transformation strategies. However, many investors remain divided on whether decentralized finance (DeFi) can fully integrate with or replace traditional financial systems.
Digital Assets Gain Momentum Across Portfolios
The study shows that institutional portfolios are primarily concentrated in stablecoins and tokenized versions of traditional assets, such as equities and fixed income, each accounting for roughly 1% of total holdings.
Meanwhile, cryptocurrencies remain the strongest-performing segment, with Bitcoin leading for 27% of respondents and Ethereum ranking second at 21%.
“We’re seeing a decisive shift toward digital assets as institutions seek diversification and long-term efficiency gains,” said a market strategist familiar with the report.
More than half of surveyed investors (52%) believe that between 10% and 24% of all investments will be digital or tokenized by 2030, though only 1% expect most financial instruments to move fully on-chain.
AI and Blockchain at the Core of Digital Transformation
Nearly all institutions surveyed are deploying or planning digital transformation initiatives that use distributed ledger technology (DLT) and AI-driven automation to streamline business operations.
29% said blockchain is integral to their technology roadmap, while over 60% are applying it to cash flow management and data processing.
“AI and blockchain are no longer viewed as experimental — they’re converging into the backbone of modern finance,” the report noted.
About 45% of respondents believe that recent advances in generative AI will accelerate blockchain and tokenization development by enabling faster, more secure smart contract creation.
Hybrid Future: DeFi Meets TradFi
While institutional confidence in blockchain is strengthening, few see it as a total replacement for legacy systems.
43% of respondents expect hybrid decentralized-traditional finance models to become mainstream within five years, compared with just 11% last year.
However, 14% said they don’t believe digital systems will ever replace traditional trading and custody — a sharp increase from 3% in 2024 — underscoring a cautious approach as the sector evolves.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.