Japanese Institutional Investors Show Growing Interest in Crypto Investments

In Japan, attitudes towards cryptocurrency investment are undergoing a significant shift, evolving from cautious curiosity to proactive portfolio management. This change is evident in a survey conducted by Nomura and its digital asset subsidiary, Laser Digital, which found that almost 80% of the country's institutional investors are planning to incorporate cryptocurrencies into their portfolios over the next three years. The primary motivation behind this shift is the growing perception of crypto as a tool for diversification, with many respondents highlighting its low correlation with traditional asset classes as a key factor. Although 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 trend signifies a notable improvement in sentiment. The survey revealed that 31% of respondents now view their outlook on crypto as positive, up from 25% in 2024, while negative sentiment has decreased to 18%. These findings emerge as Japan continues to refine its regulatory framework for digital assets, one of the most established among major economies. The country's early adoption of crypto exchange regulations following the 2014 Mt. Gox collapse has been followed by recent efforts to integrate digital assets into existing financial laws, including updates to the Financial Instruments and Exchange Act. This regulatory clarity has contributed to the growth of a domestic crypto ecosystem, with major companies such as SBI Holdings and bitFlyer playing key roles, and traditional financial institutions also entering the industry. Nomura's establishment of Laser Digital in 2022 to explore trading, asset management, and venture investing in digital assets is a significant example of this trend. Furthermore, over 60% of respondents expressed interest in strategies that generate income, 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 merely a speculative investment. Stablecoins are another area of interest, with 63% of respondents identifying potential use cases including treasury management, cross-border payments, and foreign exchange transactions, and trust being highest for stablecoins issued by major financial institutions. Despite remaining challenges such as the lack of established valuation frameworks, counterparty risks, and regulatory uncertainty, the focus has shifted from debating the merits of crypto investment to discussing how to invest effectively. The survey, conducted from December to January, gathered insights from 518 investment professionals, including institutional investors, family offices, and public-interest organizations.