Wealth managers and institutional investors believe artificial intelligence (AI) will help drive the development and growth of the digital assets sector, research from Nickel Digital Asset Management has shown.

Its study found that almost all (96 per cent) wealth managers and institutional investors expected the development of AI to have a positive impact on digital assets, including 26 per cent who felt it would have a very positive effect.

A similar proportion (94 per cent) believed AI would be important in shaping the development of digital asset markets, with 29 per cent saying it would be very important.

AI was found to already be playing a significant role in core investment processes, with 21 per cent of respondents having AI fully integrated across investment research and risk management, while 43 per cent had broadly deployed the technology in these areas.

Wealth managers and institutional investors saw AI’s primary value as addressing complexities and helping with market volatility as digital asset markets mature.

A third (33 per cent) said AI would have the most impact on risk management and stress testing as part of their investment process, while 31 per cent felt the largest contribution would be in trading execution and market-making.

Fewer than one in 10 (9 per cent) said AI would have the most impact on operational efficiency and 6 per cited highlighted its potential role in idea generation.

This suggested that respondents were prioritising control, resilience and market integrity over operational automation alone, according to Nickel Digital.

However, the study also highlighted barriers to the swift and widespread adoption of AI, with 78 per cent citing data quality and access as a barrier, and 70 per cent pointing to model explainability and governance.

Two fifths (40 per cent) cited the lack of internal expertise as a barrier, while 39 per cent were concerned about regulatory issues and 36 per cent were worried about cost.

Nickel Digital said that these barriers suggested that AI’s effectiveness within digital assets would depend on regulatory clarity, data frameworks, and governance.

“Across our multi-strategy portfolio, we have seen a material increase in the use of AI within quant strategies,” commented Nickel Digital CEO and founding partner, Anatoly Crachilov.

“AI is expanding the opportunity set not by replacing trader discipline, but by enhancing it. It enables managers to identify more nuanced signals, process information at greater scale, and execute with higher precision, thereby increasing the potential for sustainable alpha generation.”

Nickel Digital research was conducted by PureProfile among 260 wealth managers and institutional investors in the UK, US, Germany, Switzerland, Singapore, Brazil, and UAE, which collectively manage around $14trn in assets.

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