The Houston Firefighters’ Retirement Fund made news when it recently announced it was putting $25 million into bitcoin and ether, marking what was thought to be the first time a United States pension fund had put crypto directly onto its balance sheet.
Of course, $25 million will only be a drop in the bucket compared to the $5.5 billion in overall assets kept by the fund – more precisely, it is around 0.5% of its portfolio. But it still was notable as a first step for the historically conservative fund. And if other pensions and American retirement funds follow this trend, it might open up a huge source of greater demand for cryptocurrencies, with the funds now collectively controlling trillions of dollars in assets and with that number only going up over time.
In Sept., news broke that other pension funds, which manage a total of $7.2 billion in assets, were planning to invest $50 million into Parataxis Capital Management’s main fund, which purchases digital tokens and crypto derivatives. The investment has since been accepted by the funds’ board.
Asked if the funds were now considering further cryptocurrency investments and if direct investments were being discussed, Katherine Molnar, the chief investment officer for the fund, said her group is “considering more investments into the digital assets space.”
“We have not made the final decision about what form that could take. We remain constructive about the expected growth in this area,” Molnar said to CoinDesk in an email.
Growing investment trend?
Last week, Bank of America spoke about pension investments in cryptos in their digital assets-centered research message.
“Our discussions point toward many pension funds still in the exploratory stage. State funds in the United States are significantly underfunded with ~$1.25 [trillion] in unfunded liabilities at the end of fiscal year 2019, which has caused many to try to make up this shortfall through investments. Pension funds globally have $35 trillion in assets under management at the close of 2020, showing the possible tailwinds for cryptocurrencies if additional pension funds start to add exposure,” said analysts Andrew Moss and Alkesh Shah.
Author: Steven Sinclaire