Home Alternative Investments Tokenization in asset management | EY

Tokenization in asset management | EY

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Despite the growing interest and enthusiasm surrounding asset tokenization, there are hurdles to widespread adoption that need to be addressed. Regulatory uncertainty emerged as the primary perceived obstacle, with 49% of institutional investors and 24% of HNW investors identifying it as a significant challenge. Given the tumultuous events of the second half of 2022 and early 2023, it is unsurprising that the second-biggest perceived hurdle was a lack of trusted players in the market (selected as top reason by 12% of institutions and 24% of HNW investors).

 

Similarly, the survey revealed that both institutional and HNW investors prefer accessing tokenized assets through traditional intermediaries, presenting an opportunity for established asset managers to enter. These institutions include brokers/dealers, exchanges and wealth managers. This preference for established distribution channels indicates the importance of leveraging existing infrastructure and trusted intermediaries to facilitate the integration of tokenized assets into investment strategies.

 

Alternative asset tokenization

The survey revealed a particular interest in tokenized alternative assets, with 62% of HNW and 86% of institutional investors ranking it as their first asset of choice, compared with equities, fixed income, cash and money market funds. Within this category, private equity and real estate emerged as the top choices among investors, with 59% of HNW and 63% of institutional investors ranking private equity as a first or second top alternative, and 49% of HNW and 56% of institutional investors doing the same for real estate.

 

Institutional and HNW investors prefer real estate and private equity as top tokenized alternative of interest.

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