Japanese Institutional Investors Show Growing Interest in Cryptocurrency

In Japan, the perception of cryptocurrency is transitioning from cautious observation to active investment planning, as evidenced by a Nomura survey. Almost 80% of institutional investors in the country plan to incorporate cryptocurrency into their portfolios over the next three years, driven by the belief that it serves as a useful tool for diversification. The primary reason cited for this shift is the low correlation between cryptocurrency and traditional asset classes, allowing for more diverse investment portfolios. However, allocations are expected to be modest, with over half of respondents aiming to dedicate between 2% and 5% of their portfolios to digital assets. Furthermore, sentiment towards cryptocurrency has improved, with 31% of respondents expressing a positive outlook, up from 25% in 2024, and negative sentiment declining 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 collapse of Mt. Gox in 2014. The country's established framework has fostered a thriving domestic cryptocurrency ecosystem, with major companies such as SBI Holdings and bitFlyer playing key roles. Traditional financial institutions have also begun to explore the industry, with Nomura founding Laser Digital in 2022 to engage in trading, asset management, and venture investing. The interest in cryptocurrency extends beyond simple price speculation, with over 60% of respondents expressing interest in income-generating strategies such as staking, lending, derivatives, and tokenized assets. Additionally, 63% of respondents identified potential use cases for stablecoins, including treasury management and cross-border payments. While challenges such as valuation frameworks, counterparty risks, and regulatory uncertainty remain, investors are now focused on navigating these obstacles rather than debating the merits of investing in cryptocurrency. The survey, conducted in December and January, gathered responses from 518 investment professionals, including institutional investors, family offices, and public-interest organizations.