Japanese Institutional Investors Show Growing Interest in Crypto Assets

In Japan, the approach to cryptocurrency investment is transitioning from cautious observation to active planning, as revealed by a survey conducted by Nomura and its digital asset division, Laser Digital. Almost 80% of the country's institutional investors plan to incorporate cryptocurrency into their portfolios over the next three years, driven by a growing perception of crypto as a tool for diversification. The primary reason cited for this shift is the low correlation between crypto and traditional asset classes, allowing for greater portfolio diversification. However, the allocations are expected to be modest, with over half of the respondents aiming to dedicate between 2% and 5% of their portfolios to crypto. The survey also notes an improvement in sentiment, with 31% of respondents expressing a positive outlook on crypto, up from 25% in 2024, and a decline in negative sentiment to 18%. These findings coincide with Japan's ongoing efforts to refine its regulatory framework for digital assets, which has been in place since the Mt. Gox collapse in 2014. The country's regulatory clarity has contributed to the growth of a domestic crypto ecosystem, with major companies such as SBI Holdings and bitFlyer playing significant roles. Traditional financial institutions have also begun to enter the industry, with Nomura establishing Laser Digital in 2022 to explore trading, asset management, and venture investing. Furthermore, over 60% of respondents have expressed interest in income-generating strategies, such as staking and lending, as well as derivatives and tokenized assets, indicating a shift towards treating crypto as a comprehensive financial tool rather than a speculative investment. Stablecoins have also garnered significant attention, with 63% of respondents identifying potential use cases, including treasury management and cross-border payments. While challenges such as valuation frameworks, counterparty risks, and regulatory uncertainty persist, investors are now focused on navigating these issues rather than debating the merits of investing in crypto. The survey, conducted in December and January, collected responses from 518 investment professionals, including institutional investors, family offices, and public-interest organizations.