A new report from Coinbase and EY-Parthenon reveals that institutional crypto adoption is at an all-time high, with 83% of institutional investors planning to increase their crypto exposure in 2025.
The study, conducted in January 2025, gathered insights from 352 decision-makers across major investment firms.The findings suggest that crypto is no longer a niche asset class but is rapidly integrating into institutional portfolios.
According to the study, institutions believe that cryptocurrencies, particularly bitcoin (BTC), Ethereum (ETH), stablecoins, and select altcoins like XRP and Solana (SOL), offer attractive risk-adjusted returns over the next few years.
Moreover, the report highlights a growing belief that regulatory clarity will unlock new investment opportunities, particularly in crypto custody and structured financial products. However, challenges such as volatility, security risks, and regulatory uncertainty still linger.
Bitcoin and Ether still dominate in institutional crypto adoption, but altcoins are gaining attention.
While BTC and ETH remain the cornerstones of institutional crypto investments, the report reveals a shift toward diversification into altcoins.
Particularly, 73% of surveyed institutional investors hold altcoins beyond BTC and ETH with XRP and SOL being the most commonly held altcoins.
Per the survey, 68% of investors are interested in exchange-traded products (ETPs) for altcoins despite crypto investment products experiencing over $1.7 billion outflows in March. This suggests that institutions are becoming more comfortable with high-quality altcoins, moving beyond the traditional dominance of BTC and ETH.
Notably, altcoins like XRP and SOL are gaining traction due to their strong use cases in payments, smart contracts, and decentralized finance (DeFi) applications.
Meanwhile, the increased demand for institutional-grade investment vehicles like crypto ETPs and ETFs is further proof that traditional investors are eager to gain exposure to these assets.
Read also: CryptoQuant CEO declares altcoin season has begun—but it’s different this time
Stablecoins are becoming a key institutional tool
Stablecoins, which provide a digital representation of fiat currency on the blockchain, are seeing increased institutional adoption. According to the Coinbase study, 84% of institutional investors are either using stablecoins or plan to do so.
It further shows that stablecoins are being used for various financial activities beyond crypto transactions, with many firms utilizing them for yield generation (73%), foreign exchange (69%), internal treasury management (68%), and payments and settlements (63%).
These findings underscore the growing importance of stablecoins in institutional finance, with investors using them for a wide range of purposes beyond trading. Notably, their ability to provide liquidity, reduce transaction costs, and enable fast cross-border payments makes them a compelling asset for large investment firms.
Read more: Stablecoins: Their roles in the crypto ecosystem, types and associated risks.
DeFi adoption among institutions set to surge
The study also highlights the growing interest in DeFi, which is set to experience a major surge in institutional adoption. Based on the study findings, only 24% of institutional investors engage with DeFi.
While that number is expected to triple to 75% within the next two years, the most attractive DeFi use cases for institutions include derivatives trading and staking; lending and borrowing protocols; cross-border settlements and payments; yield farming and liquidity provision.
DeFi’s ability to offer financial services without intermediaries, along with higher yield opportunities, is proving to be a game-changer for institutional investors. As regulatory frameworks develop, more institutions are expected to explore on-chain financial services and tokenized assets.
Despite the overwhelmingly positive sentiment, institutional investors acknowledge the challenges ahead. According to the Coinbase report, the biggest concerns include:
- Regulatory uncertainty (52%) – Unclear and inconsistent global regulations remain a major barrier to full-scale adoption.
- Market volatility (47%) – Crypto’s price swings continue to make some investors hesitant.
- Security and custody risks (33%) – Safe storage of digital assets remains a priority, with institutions seeking better custodial solutions. Recall that Bybit, one of the leading crypto exchanges by trading volume, recently suffered an hack, with over $1.46 billion worth of Ethereum-related tokens stolen.
However, 68% of investors believe that increased regulatory clarity will be the catalyst for the next wave of institutional crypto adoption.
Final thoughts
The data from Coinbase’s study reinforces the growing belief that crypto is here to stay. Institutional investors, once hesitant, are now embracing crypto assets as a key part of their portfolios, with Standard Chartered and VanEck projecting BTC to surpass $180,000 this bull cycle. With increased allocations, regulatory advancements, and growing use cases in stablecoins, DeFi, and tokenized assets, 2025 could mark the true mainstream institutional crypto adoption.
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