First USPublic Pensions
A brace of public pension funds is backing a $40 million venture-capital fund established by Morgan Creek Digital which focuses on cryptocurrency investments. This development marks the first ever involvement of U.S. pension funds in the virtual currency investment space.
Pension Funds Anchor $40M Cryptocurrency Investment
Morgan Creek Digital announced on Tuesday (February 12, 2019) the launch of a $40 million cryptocurrency venture fund anchored by two public pension funds.
According to the announcement, the Fairfax County Employee’s and Fairfax County Police Pension Plans are the two largest investors in the fund.
Both pensions manage an asset portfolio worth about $1.2 billion. They are also the first ever public retirement fund to invest in cryptocurrencies, a notable milestone for the burgeoning industry.
Speaking to Bloomberg, Morgan Creek Digital founder, Anthony Pompliano revealed that the fund would invest in blockchain startups and cryptocurrencies. Already, the new fund has investments in notable companies like Bakkt and Coinbase.
Currently, there is no public disclosure of the investment terms, but Pompliano did indicate that the fund is a special purpose vehicle (SPV). Also, reports suggest that apart from equity investments in crypto-based companies, the fund will retain a portion of its value in cryptocurrencies like bitcoin [coin_price].
Institutions ‘Already Here’
Many crypto critics usually never fail to bring up the absence of public pension funds in the virtual currency investment arena. Back in January, JPMorgan analysts repeated the same rhetoric as part of their “Bitcoin is only valuable in a dystopia” narrative.
This morning our team at Morgan Creek Digital announced a new $40 million crypto venture fund anchored by two public pensions.
The institutions aren’t coming.
They’re already here.
— Pomp (@APompliano) February 12, 2019
The significance of these two public pension funds taking the plunge can potentially hold profound ramifications for the industry as a whole. Usually, critics attribute the reticence of pension funds in investing in cryptocurrency to issues related to manipulation, volatility, lack of security, among others.
In late 2018, the Morgan Creek Digital partner called on public pension funds to pivot towards the cryptocurrency and blockchain technology market. According to Pompliano, cryptos could serve as a viable hedge for such funds against what he called an “impending US pension crisis.”
For Pompliano, the news is a massive win for cryptocurrency, saying “the institutions aren’t coming. They’re already here.”
During the interview with Bloomberg, the Morgan Creek Digital founder also said:
There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable. The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.
Do you think this development will vastly enhance the pedigree of cryptocurrencies in the eyes of other reticent mainstream investors? Let us know your thoughts in the comments below.
Image courtesy of Twitter (@APompliano), Shutterstock