Japanese Institutional Investors Show Growing Interest in Crypto

In Japan, the perception of crypto investment is undergoing a significant shift, evolving from cautious curiosity to proactive portfolio management, as evidenced by a survey conducted by Nomura and its digital asset subsidiary, Laser Digital. Almost 80% of the country's institutional investors expressed plans to incorporate crypto into their portfolios over the next three years, driven by the growing recognition of crypto as a tool for diversification. The primary reason cited for this move is the low correlation of crypto with traditional asset classes, allowing for enhanced 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. This shift is also reflective of improving sentiment towards crypto, with 31% of respondents holding a positive outlook, up from 25% in 2024, and negative sentiment decreasing 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 Mt. Gox collapse in 2014 has paved the way for a clearer regulatory environment, which has been further enhanced by recent updates to the Financial Instruments and Exchange Act. This clarity has fostered a thriving domestic crypto ecosystem, with major players such as SBI Holdings and bitFlyer, alongside traditional financial institutions, entering the industry. Nomura's establishment of Laser Digital in 2022 to venture into trading, asset management, and venture investing in digital assets underscores the growing interest of financial giants in the crypto space. Moreover, over 60% of respondents expressed interest in strategies that generate income, such as staking, lending, derivatives, and tokenized assets, indicating a move beyond mere price speculation towards treating crypto as a comprehensive financial tool. Stablecoins have also garnered significant attention, with 63% of respondents identifying potential use cases including treasury management, cross-border payments, and foreign exchange transactions, with trust being highest in stablecoins issued by major financial institutions. Despite the remaining challenges such as the lack of valuation frameworks, counterparty risks, and regulatory uncertainty, the focus has shifted from whether to invest in crypto to how to invest. The survey, conducted from December to January, compiled responses from 518 investment professionals, including institutional investors, family offices, and public-interest organizations, highlighting a significant shift in attitudes towards crypto investment in Japan.