What the next phase of digital assets means for Japan’s institutional investors

As Japan's digital asset ecosystem matures, institutional investors are increasingly assessing how tokenisation, digital custody, and next-generation settlement infrastructure can support future growth.
 

Since we began our Digital Assets Study five years ago, the institutional conversation around digital assets has evolved considerably. Early interest was centred largely on the potential of cryptocurrencies and blockchain technology. Today, the focus is increasingly on how digital assets can be integrated into investment products, existing operating models, and the broader financial market infrastructure.

Our latest study suggests that digital assets are moving from speculative interest towards practical institutional adoption. It also highlights how institutions in Asia Pacific expect adoption to progress somewhat faster: While 51 percent of all respondents expect digital assets to become mainstream within five years, this figure rises to 56 percent among APAC institutions.

For Japan’s institutional investors, these findings are particularly significant. Not every organisation is at the same stage, and the pace of adoption will vary. However, the questions institutions are asking are becoming more practical:

• Where do digital assets fit within an investment strategy?
• What capabilities are needed to support them?
• How can institutions put the right operating structures in place?

This growing preparedness is significant when considered alongside current investment levels. Average allocations across digital asset classes (including tokenised public and private assets, as well as digital cash) stand at around 11 percent, but global respondents expect this to increase to 17 percent over the next three years. Consequently, institutions are developing the operational capabilities needed to support a potentially substantial increase in investment.
 

Getting the operating model right

One of the study’s key findings is that digital assets have implications far beyond the technology itself, affecting the entire value chain from custody and fund administration to payments, issuance, and tokenisation. This shift in operational readiness is particularly evident in APAC, where over seven in 10 respondents either already manage or distribute digital assets, or have the infrastructure and provider relationships needed to respond to demand.

Japan’s growing digital asset market brings many of these considerations into sharper focus. Indeed, 32 percent of APAC respondents expect at least a quarter of their assets to be tokenised in the next five years, compared to 28 percent globally. This raises important considerations around security tokens, tokenised funds, digital custody, stablecoins, and digital settlement infrastructure. More specifically, institutions must consider how digital assets are held and serviced, how transactions are settled, and what controls are needed to support these activities.

Rather than replacing conventional financial infrastructure, many organisations are pursuing hybrid models in which digital and traditional market structures operate alongside one another. The next challenge for Japanese investors is ensuring these structures can work together at scale, while complementing their existing investment and operating models.
 

Trust, resilience, and regulatory clarity

As the market matures, trust in the underlying infrastructure will be central to digital asset adoption. Regulatory clarity remains the leading factor accelerating digital strategies, while 69 percent of respondents prioritise working with service providers operating within an appropriate regulatory regime. Cybersecurity and financial strength are also key considerations.

These findings have clear relevance for Japanese institutions as regulatory and industry discussions continue to develop. Demonstrating sound governance, operational resilience, robust cybersecurity, and alignment with the relevant regulatory framework will be essential to build institutional confidence.

For investors evaluating potential partners, this means looking beyond technology alone. A provider’s regulatory experience, financial standing, and ability to manage operational risk matter just as much as its digital asset expertise. These are familiar considerations in traditional finance and are now becoming equally important in digital markets.
 

The growing importance of digital cash

Digital cash is also emerging as a critical component of the infrastructure needed to support broader institutional adoption. Settlement for tokenised assets is the leading use case, identified by 64 percent of respondents, followed by continuous payments and liquidity at 51 percent.

The findings illustrate why tokenised securities and funds require supporting cash and settlement infrastructure if institutions are to realise potential benefits such as faster settlement, more efficient liquidity management, and greater operational automation. Tokenised money market funds are also attracting attention as potential tools for intraday liquidity and collateral management.

For Japanese institutional investors, the next phase of digital assets will involve considering how investment, custody, administration, liquidity, and settlement fit together, and whether the supporting infrastructure is sufficiently robust to drive future growth.

Much of the groundwork is already under way, but institutions remain at different stages of readiness. Japan’s market participants must now determine how these global developments align with their investment objectives, regulatory environment, and operational requirements.

The path from experimentation to implementation will not be the same for every institution. However, a considered approach, supported by trusted infrastructure, effective governance, and resilient operating models will be critical to making digital assets work in practice.

Read Digital Assets Study 2026:Trust and security take center stage