A new white paper from offshore law firm Walkers says institutional investors are increasingly favouring regulated, traditional finance-style digital asset products over decentralised structures as the sector matures.
“The disruption narrative that defined earlier phases of the market has given way to something more commercially significant: a market in which blockchain is being applied selectively and where it adds measurable value to existing financial architecture, rather than attempting to replace it,” the white paper states.
The report, titled “Digital Assets: The Second Act,” notes that tokenised funds, tokenised debt and institutional-grade stablecoins have become the dominant focus for large investors seeking exposure to blockchain-based products. According to the paper, institutional capital is moving toward structures that are recognisable, governable and capable of operating at scale.
Walkers says the shift reflects growing demand for regulatory clarity and operational stability rather than the decentralised governance models that used to characterise the digital asset market.
Tokenisation, for instance, had undergone an evolution from a mere proof-of-concept exercise to deployment in live products, acquisitions and capital raising strategies.
The paper draws on the firm’s work across the Cayman Islands, Bermuda, the British Virgin Islands, Ireland, Jersey and Guernsey.
The report highlights recent Cayman Islands legislation involving tokenised funds, including the Mutual Funds (Amendment) Act 2026 and Private Funds (Amendment) Act 2026, which treats tokenised funds similarly to conventional investment vehicles with established oversight structures.
Walkers also points to regulatory developments in Bermuda and Guernsey, describing regulators as increasingly active participants in shaping digital asset markets rather than acting solely as enforcement bodies. The paper says clearer regulation has become a prerequisite for institutional investment and long-term market credibility.
Despite growing institutional adoption, the report notes that significant challenges remain, particularly around distribution infrastructure and banking access. Many digital asset products still require investors to use digital wallets and stablecoins, which can create operational friction compared with traditional finance systems.
Walkers also notes that traditional banks remain cautious about servicing digital asset businesses, although some institutions are developing their own blockchain-based payment and settlement systems.
The paper concludes that the next phase of the market will be defined less by whether digital assets are viable and more by how firms structure products, manage regulatory relationships and build banking and distribution networks that can support long-term growth.
