APRIL 2023

Exploring
Institutional Interest
MARCH 2023

Bitcoin
in - Keeping
Blockchain Applications
and Digital
Proof Asset
of Work Uses
Decentralized
Additional Insights from the Fidelity Digital AssetsSM
2022 Institutional Investor Digital Assets Study

Daniel
FidelityGray Research
Digital Assets Analyst,
Research Fidelity Digital Assets
Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Table of Contents
Introduction 3

Methodology and Key Findings Summary 3

Report Highlights 4

Institutions Are Here, But the Biggest Players Have Yet to Arrive 4

Signs of Positive Correlation Between Investment Tenure and Conviction 7

Institutions Own Primarily Bitcoin and Ether Among Digital Assets 8

Institutional Investors Are Most Interested in Multi-Asset and Actively Managed Products 12

Environmental Concerns’ Impact on Digital Assets Investments 13

Security and Safety Cited as Most Important Characteristics Among Custodians 14

Custody Practices Are Mixed Across Geography and Investor Segments 15

Industry Status 16

DeFi Has Not Caught On for the Majority of Institutional Investors But Is Growing 16

The Majority of Institutions Are Interested in Investing in the Tokenization of Real-World 17

Assets or NFTs

Half of Institutional Investors Are Now Familiar with Bitcoin Mining, Up from Last Year, 19
Driven by Increases in Europe and the U.S.

Institutional Interest in CBDCs 20

Conclusion 21

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Introduction

Since 2018, Fidelity Digital AssetsSM has conducted an annual study to better understand institutional investors’
perceptions of and approach to digital assets. As a follow-up to our key findings report on the Fidelity Digital
AssetsSM 2022 Institutional Investor Digital Assets Study, we explore key data that reveal trends in sentiment and
adoption across the U.S., Europe, and Asia around decentralized finance (DeFi), central bank digital currencies
(CBDCs), environmental and cryptocurrency mining concerns, and institutional investors’ preferences for
investment products and their custody practices.

Digital asset markets are incredibly dynamic, and the past year has been no exception. This study reflects the
sentiments and behaviors of respondents in the first half of 2022, but we recognize that market developments
and the macro environment may look different from the time the survey was conducted. As a result, this
report provides additional analysis on how the events of the latter half of the year may have shifted some
perceptions—along with more institutional investor insights regarding broader use of blockchain technology,
like tokenization and DeFi.

Methodology and Key Findings Summary

To ground the analysis that follows, below is a summary of the survey methodology and key findings published
in our earlier report:

• Research field work was conducted between January 2, 2022 and June 24, 2022. Research was led by
Fidelity Consulting and Strategic Insights with Fidelity Digital Assets and the Fidelity Center for Applied
Technology.
• 1,052 total respondents included 410 U.S. investors, 359 European investors, and 283 Asian investors.
• In this report, we refer to previous instances of the study. In 2021, there were 1,100 total respondents
across the U.S., Europe, and Asia. In 2020, there were 774 respondents across the U.S. and Europe. In
2019, there were 436 respondents from the U.S.
• Field work was conducted through blind interviews that were completed via a mix of online surveys and
one-to-one phone sessions.
• The investor sample composition contained 324 financial advisors, 303 high-net-worth investors, 128
family offices, 99 traditional hedge funds, 97 pensions and defined benefit plans, 63 crypto hedge and
venture capital funds, and 38 endowments and foundations.
• Fielding took place during a significant market decline for digital assets during the first half of 2022, the
first time since the study’s inception that insights were collected during a bear market. Prior research
fielding periods took place during sideways price action in both 2019 and 2020 as well as the significant
bull market run during 2021.
• 81% of respondents revealed they believed digital assets should be part of a portfolio.
• 74% of respondents planned to buy or invest in digital assets in the future, up from 71% in 2021.
• 50% of those surveyed cited price volatility as the greatest overall barrier to investment.
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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Report Highlights
To give an overview of the topics and analysis covered in this report, below is a summary of key insights to
follow:

• 58% of institutional investors responded that they were invested in digital assets globally.
• 66% of those who expressed interest in multi-digital asset products or single and multi-digital asset
products would want an institutional multi-digital asset investment portfolio to be actively managed.
• Most investors are split on whether environmental concerns affect their decision to invest in digital
assets, with 48% citing “no impact” and 40% “less likely” to invest.
• Investors revealed security and safety, ease of use, and regulatory status as the most important
characteristics when choosing a digital asset custodian.
• Almost 4 in 10 investors indicated they participate in DeFi, with the highest levels of participation in
Europe at 50%.
• Almost 6 in 10 institutions expressed a willingness to invest in a tokenized version of real-world assets/
NFTs, in line from one year ago.
• Half of institutional investors surveyed are now familiar with bitcoin mining, up from last year and driven
by increases in Europe and the U.S.
• 42% of institutional investors surveyed find the implementation of a central bank digital currency (CBDC)
appealing, up two points from last year, driven by interest expressed from European respondents.
CBDCs continue to have the highest appeal among Asian and European investors surveyed.

Institutions Are Here, But the Biggest Players Have Yet to Arrive
Study findings revealed that 58% of institutional investors surveyed claimed to have ownership in digital
assets. Given this information, it is reasonable to wonder why we have yet to see meaningful increases in
overall market capitalization of this asset class. Currently sitting around a $1 trillion market capitalization1,
investors may expect to see a higher aggregate market capitalization if over half of the institutional
investors surveyed are currently invested in digital assets. We believe one possible explanation may be
that, while the institutions surveyed report investments in the asset class, their overall allocations may be
very small in relative comparison to the rest of the aggregate investor pool. Study findings additionally
reveal that pensions, endowments, and foundations have both the lowest adoption and the highest AUM
among respondents, indicating that adoption is concentrated to the lower AUM institutional investors and
the larger institutions haven’t yet made allocations.

1 https://coinmarketcap.com 4
Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Institutional Investment in Digital Assets

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study.

Among institutions that indicated they were likely to gain exposure, were interested in, or already have
exposure to digital assets, 31% of institutional investors surveyed globally have not yet made any allocations,
with only 5% of investors allocating a position of at least 5%. Out of this same investor base, 69% indicated
they have made some sort of allocation overall. This, along with 58% of institutional investors responding that
they are invested in digital assets globally, may explain why the percentage of institutions invested is relatively
high but the asset class remains small. Nevertheless, we think the responses are still representative of the
growing interest and demand for digital asset portfolio allocations among institutional investors.

Diving into more detail below, we see that institutional investors have signaled intentions to invest in digital
assets increasingly over time, with the associated allocation size also increasing correspondingly. One possible
explanation for this adoption preference over time is the belief that there will be more regulatory clarity
presiding over the digital asset ecosystem and more mainstream acceptance and robust infrastructure in place
to support the asset class in the coming years, as both lack of regulatory clarity and underdeveloped market
infrastructure are two commonly cited barriers to investment overall.

Allocation To Digital Asset Industry and Change in the Future

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero likelihood of gaining exposure were screened out from this question.
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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Breaking this trend down by investor segment, we see how conservative investor types like pensions
and endowments and foundations have a lower preference toward investing in digital assets than more
risk-tolerant investor segments such as high-net-worth investors and crypto hedge funds. However, in
contrast to their crypto native counterparts, traditional hedge funds express more reservations, with
78% of traditional hedge funds reporting having no ownership at the time the survey was conducted and
expressing similar sentiments to those of endowments and foundations, family offices, and pensions
toward a willingness to allocate in the future.

Allocation to Digital Asset Industry and Change in the Future by Segment

High Net Worth Investor Financial Advisors Family Offices

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero likelihood of gaining exposure were screened out from this question.

Allocation to Digital Asset Industry and Change in the Future by Segment

Pension/DB Pension Crypto HFs Traditional HF Endowment & Foundation

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero likelihood of gaining exposure were screened out from this question.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Signs of Positive Correlation Between Investment Tenure and Conviction

An interesting finding to consider surrounding institutional investor attitudes and preferences toward digital
assets is the relationship between the tenure of digital asset ownership and the conviction in the asset class. In
other words, as we see institutional investors make allocations to the asset class, is there a correlation between
the length of time of ownership of those assets and the position sizing of digital assets? While the responses to
this question are undoubtedly variable and may have been subject to change since the research fielding period,
institutional investors surveyed in all three regions expressed ambitions to make increasing portfolio allocations
to digital assets over the next five years. The graphic below illustrates the desire of institutional investors
surveyed to allocate an increasingly larger percentage of their portfolio to digital assets over time. While this
analysis may lend itself more to correlation than to causation, it highlights the potential growing appetite in
institutions across geographic regions to gain exposure to this asset class over time, as seen below.

Allocation to Digital Asset Industry and Change in the Future by Region

U.S. Europe Asia

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero likelihood of gaining exposure were screened out from this question.

Looking at this theme in more detail below, we see that investors with a longer tenure of investments in digital
assets also have higher adoption and allocation sizes in their respective geographic regions. For example, 51%
of Asian investors reported having allocations in digital assets for at least two years, and 63% of Asian investors
reported having allocations of at least 1% at the time the survey was conducted. European investors tell a
similar story, revealing a correlation between geographic regions that have a longer tenure of ownership of
digital assets and higher adoption rates.

Length of Investment Tenure in Digital Assets by Region

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero likelihood of gaining exposure were screened out from this question.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Institutions Own Primarily Bitcoin Digital Assets Ownership by Region

and Ether Among Digital Assets Digital Assets U.S. Europe Asia
Bitcoin 26% 41% 47%
Ethereum 15% 26% 22%
Among institutional investors who own digital Bitcoin Cash (and forks) 7% 14% 22%
Ethereum Classic 5% 10% 12%
assets, ownership of the top two cryptocurrencies as Litecoin 7% 13% 9%

measured by market capitalization2, bitcoin and ether, Ripple (XRP) 3% 8% 12%

USD Coin 6% 13% 15%
appears to be more favorable in Europe and Asia than Tether 4% 9% 8%
Solana* 5% 8% 6%
the U.S. In the U.S., 26% of respondents reported Binance 6% 12% 11%
Cardano 3% 7% 5%
owning bitcoin compared to 41% of respondents in Chainlink 4% 6% 5%
Stellar 3% 8% 7%
Europe and 47% of respondents in Asia. Similarly, only Polkadot 3% 7% 5%
Polygon* 6% 6% 8%
15% of respondents in the U.S. reported owning ether, Uniswap 4% 5% 5%
Gemini Dollar 3% 4% 7%
compared to 26% in Europe and 22% in Asia. One Monero 1% 5% 3%
potential reason for this discrepancy may be the more Avalanche* 4% 5% 6%
Wrapped Bitcoin* 3% 7% 7%
defined regulatory environment in Europe compared EOS 2% 5% 5%
Terra* 2% 6% 8%
with the U.S., although regulatory clarity in Asia tends Algorand* 3% 6% 4%
Zcash 2% 3% 4%
to be more mixed. Aave 3% 5% 5%
TrueUSD 3% 4% 4%
Compound 2% 5% 3%
Digital Asset Ownership Among U.S. Maker 1% 4% 5%
Institutional Investors Pax Dollar 1% 4% 3%
DAI 1% 5% 2%
Diem 1% 2% 4%
Digital Assets 2019 2020 2021 2022 Tezos 2% 6% 5%
Yearn Finance 2% 3% 3%
Bitcoin 14% 19% 21% 26% 0x 1% 2% 2%
LEO 1% 1% 3%
Ethereum 13% 9% 10% 15% Other ERC-20 Tokenized assets 1% 1% 0%

Bitcoin Cash (and forks) 15% 2% 3% 7% Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms
who expressed zero ownership of digital assets were screened out from
Ethereum Classic 16% 1% 3% 5%
this question. *Newly asked in 2022.

Litecoin 16% 3% 6% 7%
Looking at ownership among U.S. respondents alone,
Ripple (XRP) 13% 2% 3% 3%
we see that allocations to bitcoin have increased each
USD Coin 3% 3% 6%
year dating back to 2019; however, ownership of the
Tether 2% 2% 4%
ether token tells a slightly different story, dipping faintly
Solana* 5% from 13% in 2019 to 9% in 2020 before rebounding
Binance 2% 1% 6% to 10% in 2021 and 15% in 2022, as evidenced in the
chart to the left. While reported ownership percentages
Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms among alt coins were noticeably higher in 2019, this can
who expressed zero ownership of digital assets were screened out
from this question. *Newly asked in 2022. be explained in part by the smaller sample size of both
the digital assets available at the time and the number
of institutions surveyed, in addition to early respondent overstatement. Conversely, the near-constant increases
in ownership of bitcoin and ether among the surveyed institutional investors shown in the table to the left
underpin the continued institutional demand for these tokens.

2 https://coinmarketcap.com 8
Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

European investors displayed similar adoption trends, as Digital Asset Ownership Among European
Institutional Investors
bitcoin ownership increased each year dating back to 2020.
Ether ownership climbed from 13% to 27% between 2020 Digital Assets 2020 2021 2022
and 2021 and declined slightly to 26% in 2022. European Bitcoin 33% 46% 41%
institutions also expressed a greater appetite for alt coins
Ethereum 13% 27% 26%
compared with the U.S., with 14% reporting ownership of
Bitcoin Cash (and forks) 3% 6% 14%
Bitcoin Cash, 13% owning Litecoin, and 13% USD Coin.
Ethereum Classic 3% 8% 10%
Asian institutions exhibited a near-constant ownership
Litecoin 5% 15% 13%
percentage of bitcoin and ether from 2021 to 2022, with
Ripple (XRP) 5% 9% 8%
bitcoin ownership increasing only 2% over that time
USD Coin 2% 5% 13%
span and ether ownership staying flat at 22%. Akin to
their European peers, Asian institutions expressed more Tether 2% 6% 9%

ownership interest in alt coins than the U.S., with 22% Solana* 8%

reporting ownership of Bitcoin Cash, 15% USD Coin, and Binance 3% 6% 12%
12% for both Ethereum Classic and Ripple (XRP).
Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms
who expressed zero ownership of digital assets were screened out
Digital Asset Ownership Among Asian from this question. *Newly asked in 2022.
Institutional Investors

Digital Assets 2021 2022

Another interesting finding from the study shows that
among the surveyed institutional investor segments, less
Bitcoin 45% 47%
established coins as defined by market capitalization are
Ethereum 22% 22%
only held by crypto hedge funds, high-net-worth investors,
Bitcoin Cash (and forks) 14% 22% and financial advisors. Conversely, family offices, traditional
Ethereum Classic 8% 12% hedge funds, endowments, pensions, and defined
Litecoin 14% 9% benefit plans all had very little exposure outside of tokens
with larger market capitalizations and longer lifespans.
Ripple (XRP) 12% 12%
Among the endowments and foundations surveyed, only
USD Coin 4% 15%
6% reported exposure to bitcoin, however, it should be
Tether 4% 8% recognized that the percentage of ownership among this
Solana* 6% investor segment was materially smaller in comparison with
Binance 13% 11% other institutional investor segments, such as crypto hedge
funds, family offices, financial advisors, and high-net-worth
Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. investors. The pensions and defined benefit plans surveyed
Firms who expressed zero ownership of digital assets were
screened out from this question. *Newly asked in 2022. reported no exposure to any digital assets. This difference
can most likely be attributed to some of the barriers to
investment mentioned in our previous report, such as concerns about volatility, security, and regulatory
classification of the assets themselves, given that more conservative institutional investor segments may be
less willing or able to allocate to digital assets perceived to be riskier or less established.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Digital Asset Ownership Among Crypto Hedge Funds

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero ownership of digital assets were screened out from this question. *Newly asked in 2022.

Digital Asset Ownership Among High-Net-Worth Investors

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero ownership of digital assets were screened out from this question. *Newly asked in 2022.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Digital Asset Ownership Among Financial Advisors

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero ownership of digital assets were screened out from this question. *Newly asked in 2022.

The universe of investable tokens and digital assets is substantial, and investors should understand the
potential risks of allocating to different coins and tokens. While assets with smaller market capitalizations
may appear attractive for their upside potential, they also carry significantly greater risks. Most are newer
to the market, which means they have not been tested over longer periods of time and their true use
cases and value propositions may remain unclear. We believe there is a clear distinction between store-
of-value tokens with a hard supply cap and fixed issuance schedule, like bitcoin, and assets that are more
comparable to venture capital bets, such as monero, which aims to fulfill a specific use case centered
around privacy. Some coins seem to lack a true use case or value proposition altogether and, at best, may
be likened to penny stocks or other investments fueled by speculation and hype rather than value accrual
or a true use case. It is critically important for every prospective investor to do their own due diligence on
an asset before investing any sum of money into it.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Institutional Investors Are Most Interested in Multi-Asset and Actively Managed Products
As the landscape of digital asset products continues to develop and offerings become more robust and
sophisticated, the institutional investors we surveyed have voiced their interest in product offerings that
hold multiple digital assets rather than individual assets. Additionally, for multi-digital asset portfolios,
institutional investors would prefer an active management structure rather than a passive or factor-based
structure. While diversification does not ensure a profit or guarantee against loss, one potential reason for
this preference for multi-asset products may be the ability to diversify digital asset holdings within portfolios
and capture gains more broadly across the digital asset landscape while potentially mitigating losses
through a less concentrated approach. Alpha generation may be another appealing factor to investors who
desire this approach, given that actively managed funds trading multiple individual assets may have greater
opportunities to maximize returns than funds that seek to follow asset prices at a broader index level.

Digital Asset Products Institutional Investors Are Most Interested In

Interest In Product That Holds...** Multi-Digital Asset Investment Portfolio

– By Region Management** – By Region

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Orange boxes added for emphasis.
**Firms who expressed zero likelihood of gaining exposure were screened out from this question.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Environmental Concerns’ Impact on Digital Assets Investments

While environmental concerns have historically been cited as a primary obstacle to adoption, data reveal
that most institutional investors surveyed are divided on whether environmental concerns surrounding
digital asset usage and adoption affect their desire to invest in digital assets, with 48% stating it has no
impact and 40% being less likely to invest in digital assets. European investors tend to exhibit the most
reservations; 53% reported being less likely to invest.

Impact of Environmental Concerns on Decision While this trend of division also

to Invest in Digital Assets by Region holds true for most institutional
investor segments surveyed
in our study, it is not true for
all. Notably, crypto hedge
funds and venture capital
funds overwhelmingly say
environmental concerns have
no impact on their likelihood
to invest in digital assets, while
pensions and defined benefit
plans are significantly less likely
Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study.
to invest in digital assets because
of environmental concerns. Just as more conservative institutional investors have reservations about
direct investment in digital assets, they also report environmental concerns. Recent developments have
highlighted the sustainable initiatives of the digital asset industry, and, consequentially, the hesitations
resulting from environmental concerns may begin to diminish over time.

Impact of Environmental Concerns on Decision to Invest in Digital Assets by Segment

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. *Small base size (<30).

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Security and Safety Cited As Most Important Characteristics Among Custodians

Institutional investors surveyed heavily cited security and safety as the most important characteristics
among digital asset custodians. Ease of use, regulatory status, fee structure, and reputation in the digital
assets space were also highlighted. The digital asset industry offers many innovative products and services,
including yield generation opportunities through staking, lending, liquidity mining, and yield farming. While
these opportunities can provide investors with the possibility of returns outside of asset price appreciation,
it is important to remember the nascency of this industry and corresponding risks associated with new
or experimental opportunities to generate yield. There may be industry hype and excitement around
developing ways to get higher returns out of your assets; however, that is not the focus for investors in
deriving value from their custodial relationship. Most institutional investors surveyed find true value in safety
and security, accessibility, and having a clearly defined structure relative to the ways their assets are used
when evaluating their choice of a digital asset custodian.

Most Important Characteristics Among Digital Asset Custodians

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. Firms who expressed zero likelihood of gaining exposure were screened out from this question.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Custody Practices Are Mixed Across Geography and Investor Segments

The study findings show an overall mixed usage of third-party custodians, self-custody, and third-party
exchanges across geographic regions; however, Asian investors skew more heavily toward using a third-
party exchange, as seen below.

Institutional Investor Digital Asset Analysis of the data by investor segment

Custody Preferences By Region reveals a similar mix. The high-net-worth
investors and financial advisors surveyed
reported using a mix across all three
custody options, though a preference for
self-custody emerged among high-net-
worth investors. While the sample size
was smaller among pensions, traditional
hedge funds, and endowments and
foundations, data from those surveyed
revealed these institutions leaned toward
use of a third-party custodian. It should
also be noted that a large majority of
these three investor segments reported
not custodying digital assets at all due to
a lack of digital asset ownership among
these segments.

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study.

**Firms who expressed zero likelihood of gaining exposure were screened out from this question.

Institutional Investor Digital Asset Custody Preferences

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. *Small base size (<30).

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Industry Status
The digital asset industry is still in its infancy and continues to solidify, resulting in a dynamic environment for
investors to navigate. Much has changed since the first half of 2022 following the research fielding period for
this study from January to June. The structure and expectations around custodial preferences in particular
may have changed drastically following recent industry events since the research was conducted.

DeFi Has Not Caught On for the Majority of Institutional Investors But Is Growing
Decentralized finance, more colloquially known as DeFi, is a segment of the digital asset industry that
operates without the involvement of banks or any other third-party firms and comprises financial products
and services that are accessible to anyone with an internet connection. DeFi is a developing area at the
intersection of blockchain, digital assets, and financial services and provides financial tools without relying
on intermediaries such as brokerages, exchanges, or banks through the use of smart contracts.

According to our study, 4 in 10 institutional investors surveyed reported participation in DeFi, with the
highest levels of participation in European institutions.

DeFi Participation by Region

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

The largest reported participation in DeFi aligns with the higher overall adoption among crypto-native
firms, high-net-worth investors, and financial advisors. Consistent with earlier findings from conservative
institutional investor types, limited surveyed endowments and foundations participate, as do a small
number of pensions and traditional hedge funds. Additionally, financial advisors in Europe and Asia have
substantially higher participation than investors in the U.S., as seen below.

DeFi Participation by Segment

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. *Small base size (<30).

The Majority of Institutions Are Interested in Investing in the Tokenization of Real-World

Assets or NFTs
Tokenization refers to a process that converts the rights and ownership to an item or object, such as a
tangible asset, into a digital token with a record that resides on a blockchain. Tokenization enables efficient
and straightforward possession, verification, and transfer of ownership powered by blockchain technology.
Tokenizing assets exposes the potential investor base to a broader market, increases liquidity compared
with traditional securities, and reduces the time required to trade. For example, while works of art, exotic
cars, or limited-edition designer products are highly collectible and are even sometimes valued in the range
of millions of dollars, these assets are physical in nature and their transfer of ownership requires a physical
change of possession. Tokenizing these assets allows for their rights of ownership to be converted into a
digital token on a blockchain, allowing investors the opportunity to trade assets electronically that were
previously unavailable for electronic trade.

Additionally, tokenization allows investors the opportunity to have fractional ownership of tangible assets
that cannot be divided physically. Some fine art commands exorbitant prices at auctions that restrict

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

participation to a select group of high-net-worth individuals who have the financial means to invest in
the asset. However, issuing tokens that represent fractional ownership of expensive artwork facilitates
an opportunity for retail investors to gain exposure to the asset when they previously were unable to do
so. As a result, tokenization opens the market up to a whole new set of investors who were previously
unable to participate but now can diversify their portfolios into asset classes that were previously more
exclusive. Tokenization removes barriers to entry for a class of market participants; the borderless nature of
digital assets and blockchain technology also gives investors a broader geographic reach. Given that most
blockchains are public and permissionless to join, meaning anyone who wishes to is able to participate,,
they remove all geographic barriers to global investors and assets not directly available to those investors
in their regions.

While almost 6 in 10 institutional investors surveyed are interested in investing in tokenized real-world assets
or NFTs, this level of interest is roughly in line with the results from the prior year. This lack of growth is not
surprising, given the diminishing demand in the NFT market by the end of 2021. Real estate tokenization
garnered the greatest appeal, followed by stocks and equity, while precious metals declined from 19% to 6%
year over year. As more progress is made toward tokenizing real-world assets on blockchains, institutional
investors will probably continue to express interest in this innovation that would provide transparent
ownership of assets to users.

Institutional Interest in Asset Tokenization

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. *Newly asked in 2022
**Firms who expressed zero likelihood of gaining exposure were screened out from this question.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Half of Institutional Investors Are Now Familiar with Bitcoin Mining, Up from Last Year,
Driven by Increases in Europe and the U.S.
Despite the unforgiving circumstances bestowed upon bitcoin miners this past year in the form of higher energy
costs coupled with a continued bitcoin price depression, institutional familiarity of bitcoin mining increased
from 43% familiarity in 2021 to 49% in 2022. This increase was primarily driven by European institutions’ jump
of twelve points year over year, going from 45% reporting as familiar in 2021 to 57% reporting as familiar in
2022. Additionally, U.S. based institutional investors increased nine points from 29% to 38% year over year. As
seen below, more than half of European and Asian investors surveyed are familiar with bitcoin mining, while
the U.S. still lags in familiarity. However, Asian investors reported a decline in institutional familiarity with bitcoin
mining year over year, dipping from 61% in 2021 to 55% in 2022. A potential explanation for this decline in
Asia may stem from the winding down of bitcoin mining operations in China in 2021, when bitcoin mining and
trading were banned in May of that year.

Institutional Familiarity with Bitcoin Mining Intriguingly, consideration for

investing in a company that
exclusively runs a bitcoin mining
operation rose seven points overall,
with the U.S. and Europe as the
primary drivers of this increase.
Institutions in the U.S. reported
an eleven point increase year over
year, while European institutions
reported a twelve point increase over
Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study.
that same time span. Conversely,
consideration among surveyed Asian institutional investors declined seven points when compared with figures
from a year ago.
Institutional Consideration for Investing
However, as affinity for investing in bitcoin in Bitcoin Mining Operations
mining operations increased in the U.S.
and Europe, so did investors’ respective
concerns about electricity usage in bitcoin
mining. Electricity usage was among the top
reasons cited by institutional investors for
not considering exposure to bitcoin mining
operations, rising from 25% to 33% year over
year for all institutional investors surveyed
and jumping from 32% to 44% year over
year for European institutions and 16% to
27% year over year for U.S. institutions. Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Reasons for Not Considering Exposure to Bitcoin Mining Operations

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. *Newly asked in 2022.

Institutional Interest in CBDCs

The study shows that 42% of institutional investors surveyed find the implementation of a CBDC appealing,
up two points from last year, driven by interest expressed from European respondents. CBDCs continue
to have the highest appeal among Asian and European investors surveyed, with a bleaker outlook from
American investors, as 4 in 10 find the idea of its implementation unappealing.

Institutional Appeal of a CBDC

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study. *In 2022, the question asked of respondents changed from “USD CBDC” to “CBDC.”

38% of those surveyed feel a U.S. dollar-based CBDC will be launched within three years and a majority
(57%) believe this will happen in the five-year horizon. The most probable catalyst for this incremental
increase past the three-year mark is the expectation of progress toward clearer regulatory guidance with the
likelihood that these regulations are slowly implemented over time.
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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

Likelihood of Implementation of U.S. CBDC

Source: Fidelity Digital AssetsSM 2022 Institutional Investor Study.

Conclusion
The findings detailed in this report are representative of institutional investor sentiments toward various
applications of digital asset and blockchain technology throughout the first half of 2022. The market events
of the second half of the year, following this survey fielding, revealed the growing pains associated with a
burgeoning industry and asset class. This period has underscored the importance of the core ethos of what
digital assets stand for—decentralization, verifiability, and transparency.

The events of 2022 highlight the need for more regulatory guidance, structure, and accountability for the
centralized entities in position to be stewards of the industry. We are humbly reminded of the infancy of
the asset class and the demand for more robust infrastructure and standard operational practices to aid in
bringing these assets safely to investors who choose to invest in them.

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Exploring Institutional Interest in Blockchain Applications and Digital Asset Uses

For institutional investor and investment professional use only.

The research survey for this study was led by Fidelity Consulting and Strategic Insights with Fidelity Digital Assets and The Fidelity
Center for Applied Technology. The research followed a similar methodology to the previous three years, composed of a detailed
survey to better understand the overall attitudes and behaviors of institutional investors as related to digital assets. Field work was
conducted between January 2, 2022, and June 24, 2022, with a total of 1,052 blind interviews of professionals from a variety of firms,
completed via a mix of online surveys and one-to-one phone sessions. As in previous years, the survey spanned a variety of high-net-
worth individuals and institutional investor segments, including financial advisors, family offices, crypto hedge and venture funds,
traditional hedge funds, endowments, and foundations, as well as pension funds and defined benefit plans.

Unless otherwise noted, all data were sourced from the Fidelity Digital AssetsSM 2022 Institutional Investor Digital Assets Study.

The information herein was prepared by Fidelity Digital Asset Services, LLC and Fidelity Digital Assets, Ltd. It is for informational
purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer or the solicitation of
an offer to buy or sell securities or other assets. Fidelity does not assume any duty to update any of the information. Please perform
your own research and consult a qualified advisor to see if digital assets are an appropriate investment option.

Past performance is no guarantee of future results. Investment results cannot be predicted or projected.

Diversification does not ensure a profit or guarantee against a loss.

Custody and trading of digital assets are provided by Fidelity Digital Asset Services, LLC, a New York State-chartered, limited
liability trust company (NMLS ID 1773897) or Fidelity Digital Assets, Ltd. Fidelity Digital Assets, Ltd., is registered with the U.K.
Financial Conduct Authority for certain cryptoasset activities under the Money Laundering, Terrorist Financing and Transfer of Funds
(Information on the Payer) Regulations 2017. The Financial Ombudsman Service and the Financial Services Compensation Scheme
do not apply to the cryptoasset activities carried on by Fidelity Digital Assets, Ltd.

This information is not intended for distribution to or use by any person or entity in any jurisdiction or country where such
distribution or use would be contrary to local law or regulation. Persons accessing this information are required to inform
themselves about and observe such restrictions.

Digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high risk tolerance.
Investors in digital assets could lose the entire value of their investment.

Fidelity Digital Asset Services, LLC, and Fidelity Digital Assets, Ltd., do not provide tax, legal, investment, or accounting advice.

This material is not intended to provide and should not be relied on for tax, legal, or accounting advice. Tax laws and regulations are
complex and subject to change. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

Fidelity Digital Assets and the Fidelity Digital Assets logo are service marks of FMR LLC.

Fidelity Digital AssetsSM and Fidelity Institutional® are businesses within Fidelity Investments that provide a variety of services to
intermediaries and other institutional clients.

This material may be distributed by the following Fidelity Institutional entities, none of whom offer digital assets nor provide clearing
or custody of such assets: Fidelity Distributor Company LLC, National Financial Services LLC, or Fidelity Brokerage Services LLC.

© 2023 FMR LLC. All rights reserved.

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