Institutional investors are moving past the testing phase and into large-scale adoption of digital assets, according to new research from State Street released Thursday. The custody bank's 2025 Digital Assets Outlook found that more than half of surveyed institutions expect their exposure to digital assets to double over the next three years, signaling a growing comfort with blockchain-based investment tools.The survey, which gathered input from senior executives across asset management and asset ownership firms, points to tokenization of private equity and fixed income as the most likely starting point. Tokenization refers to the representation of assets, such as stocks and bonds, as digital tokens that can be bought, sold and traded on blockchains. By 2030, a majority of respondents expect between 10% and 24% of their total portfolios to be tokenized. In practice, that could mean investors holding blockchain-based versions of traditionally illiquid assets — potentially making it easier to trade or revalue them.Transparency and operational efficiency are driving the shift. Over half of respondents cited improved visibility into asset data as a key advantage, while others highlighted faster trading and reduced compliance costs. Nearly one in two expect cost savings of at least 40% from adopting digital asset infrastructure.The study also points to how emerging technologies are converging. Many respondents see generative AI and quantum computing as complementary tools that could further streamline investment operations.State Street, which oversees $49 trillion in assets under custody, said 40% of institutions now have dedicated digital asset units. “Clients are rewiring their operating models around digital assets,” said Donna Milrod, the company’s chief product officer. “The shift isn’t just technical — it's strategic."