In a recent examination by Nickel Digital Asset Management (Nickel), key findings reveal a rising interest in tokenization and decentralized finance (DeFi) among institutional investors and wealth managers. Nickel, established by seasoned professionals from Bankers Trust, Goldman Sachs, and JPMorgan, provides valuable insights into the changing landscape of financial investments.

The survey covered individuals overseeing a combined $816 billion in assets across major financial centers such as the US, UK, Germany, Switzerland, Singapore, Brazil, and the United Arab Emirates. It highlights a strong enthusiasm for exploring the possibilities presented by tokenization and DeFi.

A significant 75% of participants foresee a substantial increase in the use of tokenization for investment funds and asset classes over the next five years, with an impressive 14% expecting exponential growth within this period.

Moreover, the research points to a prevailing belief among industry experts regarding DeFi's transformative influence on traditional financial institutions. A striking 81% of respondents anticipate DeFi to bring about a revolution in standard business practices, with 15% foreseeing significant disruptions.

Despite the positive outlook, the study reveals persistent concerns hindering the widespread adoption of DeFi within institutional spheres. Key barriers include issues related to know-your-customer (KYC) and anti-money laundering (AML) compliance, cited by 62% of participants. Additionally, technology risks (47%), tax implications (46%), and liquidity constraints (45%) are identified as significant obstacles.

Participants stress the importance of regulatory clarity (36%) and secure custody solutions (31%) to encourage greater institutional participation in DeFi. Alarmingly, one out of every five respondents (18%) highlights a shortage of specialized talent capable of navigating the complexities of DeFi investments.

Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, acknowledges the industry's cautious approach towards embracing DeFi while underscoring the potential benefits for early adopters.

"Interest in tokenization and DeFi investments is growing among investors, with research indicating a rising curiosity in these opportunities," notes Crachilov. "While concerns persist, institutions have much to gain by exploring this emerging sector."

The study, conducted in January 2024, involved 200 institutional investors and wealth managers from various global financial hubs. It was commissioned by Nickel Digital and carried out by market research firm Pureprofile.