Grayscale CEO Says Pension Funds Are Actively Exploring Crypto

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Grayscale CEO Says Pension Funds Are Actively Exploring Crypto
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Grayscale CEO Michael Sonnenshein said a growing number of pension fund firms are looking to add cryptocurrencies to clients’ portfolios.

Grayscale CEO Michael Sonnenshein told CNBC that despite the recent volatility in the market, there is still interest in incorporating cryptocurrencies into people’s pension portfolios. He noted that more pension funds are exploring the possibility, while keeping a close eye on the regulatory environment.

“We’re spending time talking to politicians and some of the biggest pension and endowment funds, focusing on diversifying their portfolios and actively exploring cryptocurrency allocations. It’s a different consensus,” Sonnenshein told CNBC.

Fairfax County, Virginia, became one of the first counties in the U.S. in 2019 to invest more than 8% of client pension funds in cryptocurrency vehicles, using yield farming to generate returns of 9% or more. The county’s Virginia Police Retirement System also invested $50 million in Parataxis Capital Management’s fund, which buys cryptocurrencies and cryptocurrency derivatives.

Binance

Last year, Altshuler Shaham, an Israeli pension fund, invested $100 million in the Grayscale Bitcoin Trust, which allows customers to use bitcoin. The Houston Firefighters Relief and Retirement Fund announced in October that it would invest $25 million worth of bitcoin and ether, becoming the first U.S. public pension fund to offer cryptocurrency to its more than 6,600 donors, Bloomberg reported.

California pension fund CalPERS has a stake in mining giant Riot Blockchain. Australian Investment Queensland, one of the top five pension funds in the country, has expressed interest in cryptocurrencies.

Government Officials Oppose Including Crypto In Retirement Savings

Fidelity Investments announced in April 2022 that it would offer members of its 401(k) plans the option to allocate 20% of their portfolio to cryptocurrency at the employer’s discretion. The plan was opposed by the U.S. Department of Labor at the time. “These investments present significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft and loss,” the department said. Prominent crypto critic Elizabeth Warren also opposed the plan, calling crypto a “new shadow bank” run by a group of “faceless” developers.

too unstable?

Treasury Secretary Janet Yellen said cryptocurrencies are too volatile to be included in pension funds, but more pension funds have invested in risky vehicles such as commodities and private equity. In Britain in the 1970s, railway pension funds put cash into art to hedge against inflation, The Times reported.

The Grayscale CEO disagreed with Yellen, calling her “short-sighted,” adding that investors know the long-term benefits of cryptocurrencies.

Grayscale is awaiting feedback from the SEC on converting its Grayscale Bitcoin Trust into a spot Bitcoin ETF. The SEC is expected to issue a ruling by July 6. Meanwhile, the company has beefed up its legal team with former Attorney General Donald Verrilli and is preparing for a potential court battle with securities regulators.

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