Institutional investor demand for digital assets in Asia significantly outpaced most other regions, according to a BNY Mellon report, with expectations of increasing interest in the coming years.

Asia – defined as the major hubs of Hong Kong and Singapore – is the leading market for institutional crypto demand, according to a recent BNY Mellon survey, with 75 percent of respondents claiming to be currently exploring or investing in tokenized assets.

This could be due to several factors including early embracement, regulatory clarity, market infrastructure and market structure with strong issuance of fixed income securities – often a subject of early tokenization efforts.

In second place for institutional demand is Brazil at 60 percent followed by Europe (48 percent), UK (53 percent) and North America (49 percent).

Maximum Allocation

In terms of current and future digital asset allocations, Asia was also a leader, alongside large investors with assets under management of $500 billion to $1 trillion.

According to the survey, respondents in Hong Kong and Singapore are currently willing, on average, to allocate a maximum of 25 percent in digital assets «if the regulatory environment was favorable and the necessary infrastructure was in place». And in 2-5 years, this figure rises to 35 percent. 

Amongst all institutions worldwide, respondents said they would, on average, allocate a maximum of 19 percent under current conditions and 29 percent in 2-5 years. 

One-Stop Shop

Globally, there is also a strong preference for integrated providers led by demand in Brazil (90%) and followed by Europe (89 percent), UK (71 percent) and North America (71 percent). In contrast, only 50 percent of respondents in Asia preferred one-stop shops, demonstrating greater willingness to explore an open-platform approach.

BNY Mellon commissioned Celentto to survey over 270 institutional investors across North America (US, Canada), UK, Europe (Germany, Switzerland, France, Benelux), Brazil and Asia (Hong Kong, Singapore). The survey was conducted in May and June 2022 with international asset managers, asset owners, and hedge funds.

«Digital assets are here to stay. Even with recent market volatility, our level of conviction remains strong, keeping our sights on the long-term opportunities and transformative potential of the underlying technology,» said BNY Mellon head of digital assets Michael Demissie.