Sovereign investors see structural potential in digital assets

Sovereign investors are increasingly recognising the potential in digital assets. Although direct allocations remain modest, they are expanding as sovereign wealth funds view digital assets through the lens of long-term optionality rather than speculative positioning. Similarly, central banks are simultaneously advancing their own digital currency initiatives while balancing the potential for innovation against systemic stability considerations.

Amidst this background of continued but measured exploration, sovereign wealth funds and central banks are identifying key distinctions between digital asset technologies and digital assets themselves. They’re discussing pertinent topics such as blockchain’s ability to transform financial systems, investor confidence in cryptocurrencies, and exploring blockchain applications in central bank digital currencies.

These are just some of the insights that emerged from conversations with sovereign investors as part of the 2025 Invesco Global Sovereign Asset Management Study. 

Are sovereign wealth funds making more investments in digital assets?

This year's study shows a small but notable increase in the number of sovereign wealth funds that have made direct investments in digital assets compared to 2022. This signifies a shift in investor mindset from previously abstract and passive interest towards real world participation, particularly from the Middle East, even if it is one of a cautious nature.

The number of sovereign wealth funds investing in digital assets has increased over the past three years.

Investment in digital assets (% citations from sovereign wealth funds)

Most sovereign wealth funds don’t view digital assets as core allocations. They are more likely to view digital assets as small, highly asymmetric bets on future technological disruption that don’t jeopardise core mandates or fiduciary obligations.

This strategic optionality affords sovereign wealth funds with the opportunity to capture the benefits of investing in digital assets in a scenario where blockchain-based financial systems succeed in being adopted more broadly. Direct allocations continue to remain rare, but as the financial landscape and regulatory bodies mature, sovereign wealth fund participation over time becomes more likely, especially under the Trump presidency.

Digital assets are not positioned as substitutes for ‘safe havens’ like gold, and are approached with far more caution, with allocations being extremely limited and typically only a few basis points of total portfolio value.

As one North American sovereign wealth fund explained, “We are not currently invested in digital assets but recognise their potential benefits and are monitoring developments to inform future decisions.”

What digital assets are sovereign wealth funds in emerging markets interested in?

In addition to exploring the barriers to investing in digital assets in more detail, our study has also identified a new trend in the growing interest in stablecoins among sovereign wealth funds in emerging markets. This shift reflects an evolving mindset: digital assets are not monolithic. Sovereign wealth funds are increasingly distinguishing between different instruments and assessing how various components of the digital asset ecosystem might serve specific strategic functions.

In particular, stablecoins offer several benefits for these investors, including their price stability and potential for real-world application, which makes them particularly suitable for future cross-border payment systems or liquidity management tools.

How are central banks approaching digital currencies?

Central banks are exploring central bank digital currencies (CBDCs) as part of broader digital finance strategies, with interest high but deployment limited. Although there is growing recognition of the benefits, most are still in research, design, or pilot stages due to the scale and complexity of the risks involved.

Motivations vary by region:

• Emerging markets see CBDCs as tools for financial inclusion, modernising payments, and reducing reliance on volatile currencies.
• Developed markets focus on enhancing payment efficiency, safeguarding monetary sovereignty, and maintaining financial stability amid growing private sector competition.

Significant barriers such as cybersecurity threats, disintermediation risks, technological challenges, and governance issues pose hurdles. Designing scalable, interoperable, privacy-protective, and resilient CBDCs is complex, and for the time being most central banks are focusing their efforts on incremental innovation, sandbox experiments, partnering with private sector firms, and coordinating internationally to test models and standards.

Digital assets: Active allocations or asymmetric exposure?

Therefore, positioning digital assets as portfolio optionality can provide sovereign investors with the opportunity to gain asymmetric exposure to a rapidly evolving financial landscape. To learn more about how central banks and sovereign wealth funds are responding to a digitising financial system, read our complete study.