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Pension funds have started buying bitcoin, a sign that even the normally staid corners of finance are finding it difficult to ignore the huge potential returns from cryptocurrencies.
Retirement programs in Wisconsin and Michigan are among the largest holders of U.S. stock market funds allocated to them encryptionwhile some UK and Australian pension fund managers have also made small allocations in recent months to Bitcoin Using funds or derivatives.
The surge in bitcoin last year, which more than doubled to more than $100,000, has spurred interest from conservative trustees, advisers say.
Cryptocurrency analysts predict that it may double again this year with the arrival of… The pro-encryption Trump administration. The president-elect pledged to make the United States “the world’s Bitcoin superpower” and end the regulatory crackdown on the sector.
“Since Election Day, we've had an influx of inquiries – trustees don't like to think there's a hot asset class they don't want,” said Matt Scott, a consultant at Mercer, which advises UK pension funds. You know anything about him.”
Most pension funds have turned to U.S.-regulated exchange-traded funds approved last year, which invest directly in cryptocurrencies on behalf of investors and track the prices of tokens such as bitcoin and ethereum.
The Wisconsin Investment Board was the 12th-largest shareholder in BlackRock's Bitcoin ETF at the end of September, according to its most recent filings, a holding now worth about $155 million after the fund jumped 50 percent since the start of the quarter. .
Michigan is the sixth-largest shareholder in Grayscale's ETF and its stake is worth $12.9 million, based on a November regulatory filing. She is also the 11th-place holder of the ARK 21Shares Bitcoin ETF, run by investor Cathie Wood, which is up 14 percent since the election.
Pension funds are returning to cryptocurrencies after some notable failures in the crypto market crisis two years ago. Canada's Ontario Teachers' Pension Plan canceled a $95 million investment in failed cryptocurrency exchange FTX when it collapsed in 2022. The Quebec Deposit and Deposit Fund, Canada's second-largest pension fund manager, I confess She got into the cryptocurrency space “very early” when she backed off a $150 million investment in cryptocurrency lending platform Celsius Network.
“There is no doubt that the headwinds are disappearing… I think you will see more of that institutional adoption,” said Alex Pollack, head of UK and Israel at 21Shares, a Swiss company that offers cryptocurrency trading products.
In the UK, pensions consultancy Cartwright said it advised on its first bitcoin deal, with a small, undisclosed £50m pension scheme allocating around £1.5m directly to bitcoin rather than an ETF, in the hope that Huge revenues help fill its financing. Impotence.
Sam Roberts, director of investment advisory at Cartwright, said that while the pensions industry has been “slow moving”, he expects this year to be “very interesting” in terms of schemes deciding to allocate more to cryptocurrencies.
He said more than 50 individual savers had contacted the advisory company saying they were dissatisfied with their pension provider and wanted to move their entire funds into cryptocurrencies.
Cartwright spoke to two multi-employer pension funds about setting up a bitcoin fund for investors to sign up for if they so choose, so that the funds don't lose members looking for exposure to cryptocurrencies.
“They could see a lot of members moving in… There would be a clear advantage to first move,” said Roberts, who added that discussions were still in the early stages.
Australia's AMP, which manages pension funds, has also used bitcoin to earn returns.
“AMP portfolios have pulled back this year and are more modestly allocated to bitcoin futures,” said Steve Fleig, a senior portfolio manager at AMP. “We generally believed that although cryptocurrencies represent a risk, are new and not yet fully proven, they have become too big, and their potential is too great for us to continue to ignore them.”
However, funds allocated to bitcoin and other cryptocurrencies remain a minority in the pensions industry, with advisers often reluctant to recommend exposure to their clients.
In December, the US Government Accountability Office warned that crypto assets have “uniquely high volatility” after identifying 69 crypto asset investment options available to investors in retirement plans.
“We don’t think pension funds should be allocated to cryptocurrencies – they are too volatile and we don’t see any robust valuation framework that can justify the value,” said Daniel Peters, a partner in Aon’s global investment practice. The way for pension funds to gain exposure was through hedge funds with experience and skill in the asset class.
“We fundamentally do not believe this should be part of a superannuation fund strategy for these reasons unless it is allocated through a specialist manager,” he said.
