Key Takeaways
- • More than 60 per cent of Asia-Pacific institutional investors said "appropriate regulatory regime experience" is the most important feature of a digital asset provider, according to an October survey by State Street.
- • Lack of regulatory clarity in target jurisdictions on the treatment of digital assets was the most commonly cited barrier to adoption, with 46 per cent of respondents ranking it among their top three barriers.
- • Cybersecurity (54 per cent) and financial strength (47 per cent) were the next most important attributes sought in digital asset providers.
- • 63 per cent of surveyed institutions already manage or distribute digital assets, and 51 per cent expect digital assets to be widespread within five years.
- • Tokenised asset settlement was the leading use case (64 per cent), with bank-issued US dollar stablecoins (49 per cent) and tokenised deposits (48 per cent) the preferred forms of digital cash.
Summary
Asia-Pacific institutional investors are calling for clearer regulation of digital assets as adoption accelerates, according to an October survey by State Street reported by the publication's Singapore desk. More than 60 per cent of respondents said "appropriate regulatory regime experience" is the most important feature of a digital asset provider. The findings come as global investors grow more bullish on the long-term prospects of digital assets while placing greater weight on trust, cybersecurity, regulation and market infrastructure.
Regulatory uncertainty remains the most frequently cited barrier to adoption. Some 46 per cent of respondents ranked the lack of regulatory clarity in their target jurisdictions, particularly on the treatment of digital assets and on investment operations and systems, among their top three barriers. Other key provider attributes included cybersecurity (54 per cent) and financial strength (47 per cent). Angus Fletcher, head of digital asset solutions at State Street, said investors are spending less time debating the technology and more time on infrastructure, operations, regulation and risk as the market matures.
The survey indicates institutions expect significant changes to investment operations over the next three years. More than half of respondents said their custody, payments and fund issuance offerings would be affected. Respondents increasingly want digital asset regulation and infrastructure to resemble existing market structures, suggesting they are not seeking an entirely new financial system but rather the extension of established principles into digital markets.
Adoption is already well advanced. Per the report, 63 per cent of institutions already manage or distribute digital assets and have systems in place should customer demand arise, and 51 per cent expect digital assets to be widespread in five years, if not already. Some 45 per cent described digital cash as "very important" to their digital asset strategy, while tokenisation and fund issuance are a priority for 52 per cent. Tokenised asset settlement was the leading use case at 64 per cent, with bank-issued US dollar stablecoins (49 per cent) and tokenised deposits (48 per cent) named as preferred forms of digital cash.
Regulatory uncertainty remains the most frequently cited barrier to adoption. Some 46 per cent of respondents ranked the lack of regulatory clarity in their target jurisdictions, particularly on the treatment of digital assets and on investment operations and systems, among their top three barriers. Other key provider attributes included cybersecurity (54 per cent) and financial strength (47 per cent). Angus Fletcher, head of digital asset solutions at State Street, said investors are spending less time debating the technology and more time on infrastructure, operations, regulation and risk as the market matures.
The survey indicates institutions expect significant changes to investment operations over the next three years. More than half of respondents said their custody, payments and fund issuance offerings would be affected. Respondents increasingly want digital asset regulation and infrastructure to resemble existing market structures, suggesting they are not seeking an entirely new financial system but rather the extension of established principles into digital markets.
Adoption is already well advanced. Per the report, 63 per cent of institutions already manage or distribute digital assets and have systems in place should customer demand arise, and 51 per cent expect digital assets to be widespread in five years, if not already. Some 45 per cent described digital cash as "very important" to their digital asset strategy, while tokenisation and fund issuance are a priority for 52 per cent. Tokenised asset settlement was the leading use case at 64 per cent, with bank-issued US dollar stablecoins (49 per cent) and tokenised deposits (48 per cent) named as preferred forms of digital cash.
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