The cryptoasset market is going through a major transition, from the current focus on retail speculation to an era of institutional adoption. Luxembourg is quickly becoming a key center in this development, aided by its more favorable regulatory regime. According to a recent PWC survey, tokenisation is one of the top two priorities among asset and wealth management respondents. This trend is most pronounced across private markets and represents a massive inflection point for the future.

Institutional Investment Fuels Cryptoasset Market Transformation

What was once a cryptoasset market speculative trading environment primarily dominated by retail has now seen an influx of institutional investment. Together with recent developments, this transition represents a new starting point – one which represents the responsibility and maturity of the digital asset space. Dariush Yazdani, head of the Global Asset and Wealth Management Research Center at PWC, emphasized this change when presenting the PWC survey. The overall report is the product of thoughtful insights shared by 128 survey respondents.

"When asked how they would assess the current global cryptoasset market, we see a point of inflection. Clearly, conviction has strengthened, you see the change from 33% to 50%. It’s partly the Trump effect, but it’s mainly this institutionalisation! … Major traditional players are taking serious positions in cryptoassets, and this is a sign of confidence that marks a key moment of maturity. Digital assets are increasingly integrated into traditional finance. Crypto is no longer a niche. It is entering the financial system." - Dariush Yazdani

Now, institutional investors are realizing the transformative potential of cryptoassets, fueling mainstream adoption at a record pace. This flood of institutional capital is working to stabilize the market and drawing additional investment.

The growing involvement of traditional financial institutions underscores the increasing legitimacy and integration of cryptoassets into the broader financial system. As more institutions enter the space, the market is expected to mature further, offering new opportunities for growth and innovation.

Tokenisation Gains Momentum in Asset Management

Tokenisation is perhaps the biggest trend shaking up the asset and wealth management industry — and private markets in particular. This process is called tokenization and it turns the rights to an asset into a digital token. You can then buy and sell this token on a public blockchain.

"Regarding tokenisation: if you are in the asset and wealth management industry, particularly in private markets, this is one of the major trends that we are seeing at PWC, in the Global Asset and Wealth Management Research Center that I lead. We are forecasting a compound annual growth rate of 51% for tokenisation worldwide, in investment funds alone. This should exceed $300bn by 2028. So, clearly, we’re anticipating very strong growth in tokenisation." - Dariush Yazdani

According to the PWC survey, 20% of respondents already own tokenised assets and 27% intend to issue them. Yet, 53% of respondents are not planning any tokenisation initiatives in the short term. The tokenisation market is projected to exceed $300 billion by 2028. This rapid expansion will be powered primarily by an extraordinary compound annual growth rate of 51% in investment funds serving the movement.

Though the promise of tokenisation is obvious, hurdles still exist. Dariush Yazdani, from Everis, talked about the complexities in getting tokenisation solutions on the ground.

"Everyone can use their own standards to implement tokenisation solutions. And then there are the implementation costs and the technical requirements." - Dariush Yazdani

Luxembourg's Strategic Position in the Digital Asset Revolution

Luxembourg has made shrewd moves to ensure that it is at the forefront of the digital asset revolution. The country’s rapid and proactive approach to regulatory development has provided an environment conducive to cryptoasset and blockchain innovation. Luxembourg's regulatory framework includes two key laws supporting this evolution: the law on blockchain and the law on cryptoassets and green bonds.

The EU's Mica regulation further solidifies Luxembourg's position by providing a unified legal framework for crypto-asset service providers across the 27 member states. This regulatory clarity is crucial in creating an environment that encourages innovation and attracts investment in the burgeoning digital asset space. FTA board member Dariush Yazdani pointed out the critical need for regulatory harmonization.

"Finance and financial services, by definition, it’s a globalised industry. And if you have to adopt different regulations, consult different regulatory frameworks and comply with all of them, that represents a cost--and a risk, right? And this uncertainty is clearly one of the major elements." - Dariush Yazdani

In fact, nearly 9 out of 10 of respondents believe that tokenisation is a key topic for the future of asset management in Luxembourg. This positive momentum adds further impetus for bringing digital asset technologies to the U.S. and not only to stay competitive in the evolving financial landscape, but to lead it.