Institutional investors are increasing their involvement in digital assets like blockchain and AI, with a State Street report showing that 7% of portfolios are in digital assets, expected to rise to 16% by 2028. Most investments are in stablecoins and tokenized assets, with Bitcoin and Ethereum delivering the highest returns.

Blockchain and AI are key to institutions’ digital transformation, with 29% of respondents saying blockchain is crucial to their plans. Many are using blockchain for cash flow management, data processes, and compliance functions. Generative AI is seen as speeding up digital asset development, improving security and cost-effectiveness.

While confidence in digital assets is growing, many doubt that blockchain will fully replace traditional trading and custody systems. 43% expect hybrid decentralized and traditional finance to become mainstream in five years. However, 14% believe digital investment systems won’t fully replace traditional methods.

Read more at Cointelegraph: Institutional investors expand digital asset exposure