In today’s rapidly evolving financial landscape, digital assets have emerged as an intriguing frontier.
For investors seeking to stay ahead of the curve, understanding this asset class can be beneficial.
What are digital assets?
Digital assets are items of value — or a representation of a right or entitlement to an item of value — that exist in digital form and can be securely owned, traded, or invested in online. Digital assets range from cryptocurrencies to tokenized real estate deeds, digital art, and even claims on physical assets, such as homes or oil paintings. At the heart of this ecosystem is blockchain technology, a decentralized digital ledger that records transactions with transparency and security.
Blockchain technology enables peer-to-peer exchanges without the need for traditional intermediaries like banks or governments, all while still providing privacy, data security, and personal control for its users.
Why consider digital assets now?
Though it’s still in the initial stages of growth, the digital asset market is maturing. As of early 2025, the market includes thousands of digital assets with a combined capitalization of $3.6 trillion.Footnote1 Regulatory clarity has also improved, with some institutions now being allowed to custody digital assets and the Securities and Exchange Commission (SEC) approving various spot exchange-traded products. These developments signal a growing market with increasing depth and breadth.
Moreover, digital assets are being integrated into businesses such as music royalties and entertainment rights to real estate transactions.
Timing the market: Too early or too late?
One of the most common questions from investors is whether it’s too early or too late to invest in digital assets. According to Wells Fargo Investment Institute, “While prices have surged — Bitcoin alone has seen astronomical returns since its inception — the market remains in its early stages. Most digital assets are less than a decade old, and volatility, while present, is typical of emerging asset classes.”
Investors may consider the broader adoption trends and the potential for digital assets to serve as portfolio diversifiers, particularly within the real assets category.
Key considerations
Due diligence is critical. Digital assets carry unique risks, including regulatory shifts, market volatility, and operational complexities, to name a few. A thoughtful, informed approach is essential.
Diversification potential. As part of a broader asset allocation strategy, digital assets may offer diversification.
Estate planning implications. If digital assets are directly held, it may be appropriate to care for access protocols and other matters when estate planning.
Final thoughts
Digital assets represent more than a speculative trend. They could be possibly a foundational element of the next phase in the digital economy. For some individuals, the opportunity lies not just in potential returns, but in being part of a transformative shift in how value is created, exchanged, and preserved. Consult with your financial advisor to explore how digital assets might fit into your investment strategy.
Wells Fargo Investment Institute, Inc., is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.
Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Exchange-traded funds are subject to risks similar to those of stocks. Investment returns may fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed, or sold, may be worth more or less than their original cost. Exchange Traded funds may yield investment results that, before expenses, generally correspond to the price and yield of a particular index. There is no assurance that the price and yield performance of the index can be fully matched.
This document is a general communication being provided for educational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product or strategy. Any examples used are for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested.
Digital assets are not a physical currency, nor legal tender. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment. An investor could lose all or a substantial portion of his/her investment. Digital assets have limited operating history or performance. Digital Assets are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional fiat currencies.
