Investors say regulation needed to assuage crypto concerns
Though many public pension funds have shied away from digital assets tied to cryptocurrencies and the blockchain, some are nevertheless moving forward with small investments in this potentially transformational yet volatile sector. Last year, for example, the $5.3 billion Houston Firefighters’ Relief and Retirement Fund decided to establish a $25 million portfolio in crypto assets. The $199.9 billion Teacher Retirement System of Texas, Austin, and two different Fairfax County, Va., pension plans have also invested in this space. These investments range from direct investments in cryptocurrencies to stakes in venture capital funds that hold a portfolio of cutting-edge startups tied to building out the infrastructure of a faster and less costly alternative payments system not tied to fiat currencies and the commercial banking system. But most public pension funds and other institutional investors need to see more to like about the sector before building sizable stakes. For investment officers contacted by Pensions & Investments, rising confidence won’t occur until stomach-churning volatility and falling prices give way to more stable returns over time.