Institutional investors and wealth managers are increasingly focusing on the opportunities from tokenisation and decentralised finance solutions (DeFI), research has shown.
According to London-based Nickel Digital Asset Management’s research, approximately 75% of respondents anticipate a surge in the adoption of tokenisation across investment funds and asset classes over the next five years. Notably, 14% of those surveyed foresee a particularly dramatic growth trajectory in this area.
The research, encompassing institutional investors and wealth managers from the US, UK, Germany, Switzerland, Singapore, Brazil and the UAE, has revealed that 81% of participants expect DeFi to reshape the modus operandi of traditional finance firms, with 15% anticipating a significant impact.
How blockchain and tokenisation are changing asset management
Despite the optimism surrounding DeFi, the study also uncovered reservations among institutional investors and wealth managers. 62% cited concerns regarding Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance as a barrier to their engagement with DeFi.
Nearly half (47%) expressed apprehensions about technology risks, while 46% highlighted tax concerns and 45% flagged insufficient liquidity in DeFi investments as a significant challenge.
Among the factors hindering greater institutional participation in DeFi, respondents identified a need for more regulatory clarity (36%), a lack of safe custody solutions (31%), and a shortage of specialised talent (18%).
FundsTech conference to take place in April
Anatoly Crachilov, CEO and founding partner at Nickel Digital, said: “Tokenisation and DeFi investments are increasingly on the investors’ radars and the research shows that the interest is only likely to grow.
Nervousness about fully engaging is understandable as the industry is still in its infancy, but this leaves huge benefits to institutions who are willing to be early adopters.”
