Two Pension Plans Take a Crypto Plunge

-edited

Two Virginia pension funds join a handful of institutions to invest in the crypto world,.

Bloomberg reports First U.S. Pension Funds Take the Plunge on Crypto Investing.

Morgan Creek Digital has scored what it says is probably the first investment in the crypto asset universe from a U.S. pension fund.

Two pension plans in Fairfax County, Virginia are anchor investors in a new $40 million venture-capital fund, according to a statement from the company. Other investors include an insurance company, a university endowment and a private foundation, said Morgan Creek Digital founder Anthony Pompliano, who declined to provide further details.

Fairfax County Retirement Systems manages three separate defined benefit plans, two of which invested in the Morgan Creek Digital fund, said Pompliano. Katherine Molnar, chief investment officer of one of the funds, said in a statement that blockchain technology, which was first developed to record the movement of Bitcoin, is an “emerging opportunity” that offers an “attractive asymmetric return profile.’’

Pompliano said his new fund is structured like a traditional venture capital fund that will invest in the equity of companies in the blockchain and digital assets industry. The fund will also hold a small percentage of its value in liquid cryptocurrencies, such as Bitcoin, said Pompliano.

Morgan Creek Digital, which is an affiliate of the investment manager Morgan Creek Capital Management LLC, exceeded its original target of $25 million for the fund. Its pitch: all traditional assets will eventually be represented by digital tokens, while the influx of intellectual capital into digital assets will create positive returns. It also argues that cryptocurrencies are not correlated to traditional assets, giving investors unique exposures.

Primarily a Technology Bet

The preceding paragraphs shows the crypto bet is primarily a bet on intellectual property, blockchain, and the digital industry , not a coin or currency bet.

Wild Bitcoin Predictions

Cease to Provide Timeframes

Realization of Fair Value

The technology has immense promise but the beneficiaries sure are unclear. It will take a long time to sort out.

As for the "fair value" of Bitcoin itself, I expect it to tend towards zero over a long period of time, in a volatile manner.

Mike "Mish" Shedlock

Comments (12)
No. 1-6
abend237-04
abend237-04

At last! "...unique exposures" and "...asymmetric returns..." both waiting at the tip of that BUY button! It's the direction that'll prove to be the problem, but who will notice with unfunded pensions where they are?

BornInZion
BornInZion

Is there no longer a fiduciary duty to protect the capital of widows and orphans?

TomKathQld
TomKathQld

The only thing tending towards zero will be "get rich quick speculators"! That shouldn't take all that much longer. (couple years?)

Zardoz
Zardoz

It's times like these that I don't regret never having a job that offered a pension. They are anything but guaranteed.

AbeFroman
AbeFroman

“all traditional assets will eventually be represented by digital tokens”

That is one bold statement. A lot of people forget the third prong of a currency definition: unit of account. To suggest that all global assets (and presumably financial statements) will be quoted/presented in crypto is... funny.