Major investors are increasing their commitments to cryptocurrency while becoming more selective regarding risk.

Most institutional investors intend to boost allocations despite rising concerns regarding regulation and risk management.

(Thomas Lohnes/Getty Images)

Key points:

• A recent survey by Coinbase and EY-Parthenon reveals that 73% of institutional investors intend to enhance their digital asset allocations in 2026, despite the recent market volatility leading them to tighten risk management and liquidity protocols.
• Institutions are transitioning towards more enduring crypto operational frameworks, favoring spot ETFs and other registered instruments while placing greater importance on governance, compliance, security, and effective custody rather than cost considerations.
• Regulatory clarity continues to be both the primary motivator and significant barrier to further institutional adoption, as investors monitor U.S. policy developments and increasingly emphasize stablecoins, tokenization, and their potential to transform trading, clearing, and settlement processes.

Institutional investors maintain a generally optimistic outlook on digital assets despite recent market fluctuations, yet they are becoming more discerning in their methods of gaining exposure, as indicated by a new survey conducted by Coinbase and EY-Parthenon.

The January 2026 survey of 351 institutional decision-makers indicated that 73% plan to increase their digital asset allocations this year, while 74% anticipate rising crypto prices within the next 12 months. Concurrently, nearly half reported that recent market fluctuations have compelled their firms to focus more on risk management, liquidity, and position sizing.

This blend of confidence and caution suggests a developing market, according to David Duong, Coinbase’s head of institutional research.

“Interest in crypto persists,” Duong stated in an interview. “Investors are seeking tighter risk controls, but they wish to maintain their allocations.”

The results imply that institutions are no longer viewing crypto as a temporary investment. Rather, many are establishing more permanent operational models surrounding this asset class, with a stronger emphasis on governance, compliance, and operational resilience.

A notable example is the current preference of institutions for market access. According to the survey, 66% of participants gain exposure via spot crypto exchange-traded funds (ETFs), and 81% prefer spot exposure through registered products. Duong clarified that this does not indicate that exchange-traded products are merely a temporary phase before institutions fully transition on-chain.

“I don’t believe it’s just a transitional vehicle,” he remarked. “It serves a specific segment of the investor community.” Nonetheless, he noted that as the market evolves, more institutions may desire direct exposure to the underlying assets rather than solely through fund structures.

Regulatory issues remain the primary tension within the market. Among those intending to increase holdings, 65% indicated that enhanced regulatory clarity is a crucial motivator, while 66% identified regulatory uncertainty as a significant concern when investing in digital assets.

This paradox could become significant if clearer regulations are established. “Regulatory clarity is functioning as both a motivator and an impediment,” Duong mentioned.

Recent developments regarding the proposed Digital Asset Market CLARITY Act have intensified this dynamic. The bill aims to delineate how crypto assets are regulated in the U.S., clarifying the roles of the SEC and CFTC while establishing rules for stablecoins and market structure. Although the legislation has not yet been enacted, policymakers and regulators have indicated increasing support for a clearer framework, and parallel guidance from agencies such as the Office of the Comptroller of the Currency has started to clarify how banks may engage with digital assets.

For institutions, this evolving landscape is vital: clearer regulations could facilitate broader participation, while ongoing uncertainty remains a significant barrier to capital entering the sector.

The survey also indicated a growing interest in stablecoins and tokenization, two areas increasingly perceived as practical infrastructure rather than speculative ventures. Eighty-six percent of participants reported that they currently utilize stablecoins or are interested in doing so, with primary use cases including T+0 settlement and internal cash management and funds transfer. Additionally, 63% expressed a strong interest in investing in tokenized assets, with over 60% expecting tokenization to substantially impact trading, clearing, and settlement processes within three to five years.

Custody has also gained prominence on the priority list. The proportion of respondents citing regulatory compliance as a critical factor in choosing a custodian increased to 66% from 25% a year prior. The significance of security and key-signing protocols rose to 66% from 8%.

Duong noted that this shift illustrates how institutions are rethinking their approach to crypto as use cases expand beyond mere trading.

“Compliance and security have now become the primary priorities,” he stated. “Notably, cost has surprisingly dropped to the bottom of the agenda.”

For Coinbase, the takeaway is that institutions still desire crypto exposure, albeit with enhanced safeguards. For the wider market, the survey implies that the forthcoming phase of adoption might rely less on mere enthusiasm and more on the industry’s ability to provide the controls that large investors currently expect.