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Largest U.S. Public Pension Fund Holds Over 100,000 Shares in Bitcoin Miner RIOT Blockchain

The largest U.S. public pension fund increased its stake in RIOT Blockchain (RIOT), a Bitcoin mining firm, during Bitcoin’s sensational price surge at the end of 2020.

According to filings on Tuesday, California Public Employees’ Retirement System (CalPERS) now holds 113,034 shared in RIOT worth nearly $2 million after loading up during Bitcoin’s Q4 rally.

The California-based public pension fund, worth nearly $450 billion, originally bought 16,907 RIOT shares during Bitcoin’s 2017 bull run. CalPERS has essentially been sitting on the shares since then and the RIOT shares were worth around $50,000 by Q3 2020.

As the Bitcoin price surged in Q4 by 180%, RIOT shares also rocketed by over 500%.

Riot Blockchain is focused on Bitcoin mining; the company previously mined Litecoin and Bitcoin Cash but has now concentrated its entire hashing power on Bitcoin. In 2020 it was announced that Riot was working with North American-based hosting firm, Coinmint.

In 2018 the company began pivoting to crypto through an acquisition of a mining facility in Oklahoma City and 7,500 Antminer S9s. The company was founded on July 24, 2000, and is headquartered in Castle Rock, CO.

During a public forum in 2016, CalPERS board members discussed blockchain as a technology investment opportunity.

U.S. Houston Firefighter’s Pension Fund Invests $25 Million in Bitcoin and Ethereum

Houston Firefighter’s Pension Fund has stated that it made some significant investment into the crypto space, another sign that retirement investments are taking crypto assets seriously despite regulatory concerns.

The Houston Firefighters’ Relief and Retirement Fund announced on Thursday, October 21, that it bought $25 million worth of Bitcoin and Ethereum through the assistance of NYDIG (New York Digital Investment Group).

The fund, which has $5.5 billion in assets under management, stated that it has been managing the investment for several years now.

Ajit Singh, the chief investment officer at Houston firefighter’s pension fund, talked about the development and expressed belief in the disruptive potential of cryptocurrencies. He said: “We have been studying this as an asset class to add to our investment portfolio for quite some time. It became an asset class we could not ignore anymore.”

Singh showed his confidence that the cryptocurrency investment will pay off, stating that: “I see this as another tool to manage my risk. It has a positive expected return and it manages my risk. It has a low correlation to every other asset class.”

Singh stated that they preferred investing in direct tokens, and that explains the reason why Houston firefighter’s pension fund invested in actual cryptocurrencies, instead of taking on risks associated with futures-related investments.

“We didn’t want to get the synthetic exposure. We decided to go directly to the token. As more and more institutional adoptions happen, there will be more and more dynamics that develop for supply and demand. And having physical assets — actual tokens — gives us in the future the possibility of income generation potential,”

Houston firefighter’s pension fund is responsible for managing the benefits of more than 6,600 active and retired firefighters as well as survivors of firefighters.

According to the group, more than half of the fund is invested in common and private equity, but also includes real estate, domestic stocks, cash, bonds, and international stocks.

Retirement Funds See Interest

According to the National Association of State Retirement Administrators, public pension funds oversee about $5.5 trillion worth of assets.

The Houston firefighters pension fund is not the first to enter into the cryptocurrencies, two pension funds in Virginia State purchased crypto investments some two years ago and recently mentioned they are planning to expand their investments by another $50 million.

As reported by Blockchain.News in February 2021, California Public Employees’ Retirement System (CalPERS), the largest U.S. public pension fund, increased its stakes in RIOT blockchain, a Bitcoin mining firm. The California-based public pension fund, worth nearly $450 billion, first purchased 16,907 RIOT shares during Bitcoin’s 2017 bull run.

In June, retirement plan provider ForUsAll offered an option to its clients to invest up to 5% of their portfolio assets in cryptocurrencies, stating the US citizens could be disadvantaged if they are not given the option of accessing cryptocurrencies in their retirement plans.

Grayscale Investments also stated this year that it has witnessed a rising number of pension funds and endowments actively investing their funds to get exposure to cryptocurrencies.

South Korea’s Teachers’ Pension Fund Announces Plans to Invest in Bitcoin on Its Balance Sheet

According to the announcement revealed by the Korea Economic Daily, the Korea Teacher’s Credit Union (KTCU), the second-largest institutional investor in South Korea, is planning to invest in Bitcoin as part of its balance sheet.

The public pension fund would not purchase Bitcoin directly but get exposure to it via investment products like Bitcoin ETFs.

The KTCU is seeking to invest in a Bitcoin Exchange Traded-Fund when the first Korea-based firm launches a Bitcoin ETF in the first half of 2022. Of course, the Mirae Asset Global investment is preparing to launch BetaPro Inverse Bitcoin ETF at any time next year.

The Korea Teacher’s Credit Union is set to become the first pension fund in South Korea to invest in Bitcoin. However, the amount of funds to be invested and the exact time of launch still remains unclear.

A KTCU official talked about the development and stated that the institution plans to consult with local asset management firms before reaching a decision concerning asset allocation.

“As there are some well-made cryptocurrency-linked ETF products by asset managers such as Korea’s Mirae Asset Global Investments, we plan to invest in the ETF products after consultation with domestic asset managers,” the KTCU spokesperson said.

The KTCU is the first pension fund with $40.2 billion in assets under management in South Korea.

At the current moment, the pension fund has allocated 40% of its investments in alternative assets, 9% in international stocks and 10% in domestic. The KTCU will also use the overseas stock accounts for investing in the bitcoin-related ETF assets, the Korea Economic Daily stated.

Crypto Has A Place in Pension Scheme Portfolio

The decision by The Korea Teacher’s Credit Union comes at a time when crypto’s widespread adoption across the world is significantly rising, particularly among pension funds.

Bitcoin has experienced massive growth in the last year, significantly outpacing the S&P 500. Several experts state that the reason for such growth is contributed by lower stock market returns in the near term, fears of inflation, and investors looking for higher yields from alternative investments.

Bitcoin is increasingly becoming a larger part of several institutional portfolios, including pension funds.

Recently as reported by Blockchain.News in February, the California Public Employee Retirement System (CalPERS), the U.S.’s largest public pension system, revealed that it increased its investment in RIOT Blockchain Inc, a publicly-traded bitcoin mining company, from $49,000 in 2017 to $1.6 million in 2020.

Pension funds such as CalPERS normally have been searching for higher investment yields by investing in private equity. However, in recent years, returns from private equity have underperformed in comparison to the S&P.

As a result, institutional investors have been showing increasing interest in even riskier assets that may produce higher yields. This search has led public pension institutions such as Virginia’s Fairfax County employee and Police Officer’s Retirement Systems and the University of Michigan’s Pension to announce plans to invest in Bitcoin and other crypto-assets.

Last week, Houston’s Firefighters Relief and Retirement Fund in the U.S. invested an undisclosed amount of its funds in Bitcoin through institutional Bitcoin services provider NYDIG.

A few days ago, the crypto space got its long-awaited ETF products, and two U.S. Bitcoin backed ETFs have already launched, thus bringing further acceptance of cryptocurrencies.

With the success of the ProShares Bitcoin Strategy EFT, which garnered more than $1 billion in assets in just two days, chances are higher for the queue of other firms hoping to enter into the sector.

The Valkyrie Bitcoin Strategy ETF started trading on the Nasdaq stock exchange on Friday last week, with 3.1 million shares changed hands during that day alone.

All these demonstrate great interest among investors looking to invest in Bitcoin and other cryptocurrencies.

Ontario Teachers’ Pension Plan Leads £210M Round in UK-Based Consumer Finance Platform Lendable

Lendable.co.uk, a major AI-powered consumer finance platform based in London, announced on Thursday it raised £210 million in a funding round led by the Ontario Teachers’ Pension Plan Board through its Teachers’ Innovation Platform (TIP).

That is not the first time Canada’s pension organization invested in startups. In October last year, the Ontario Teachers’ Pension Plan and its Teachers’ Innovation Platform led a funding round in which the FTX crypto exchange obtained $420 million from various investors.

Teacher’s Innovation Platform (TIP) is a new investment department within Ontario Teachers’ Pension Plan (a pension fund company) and focuses on late-stage venture and growth equity in cutting-edge technology firms.

In the press release issued by Lendable, the company said that it plans to use the fresh funding to develop new products and to enable its expansion in new markets.

Martin Kissinger, founder and CEO of Lendable.co.uk, talked about the financing and said: “We are excited to partner with TIP as we accelerate our expansion across products and markets. Our DNA from day one has been to bring transparency and fairness to consumer finance, and we are proud of the fantastic feedback we consistently receive from our customers. TIP is a global growth investor with a long-term view who can support our ambition to make this giant market work better.”

Meanwhile, Olivia Steedman, Senior Managing Director at TIP, also commented about the development and stated: “Lendable’s seamless, quick and easy to use products, powered by advanced AI, are shaping the future of consumer finance. We’re delighted to work with Martin and his visionary team to deliver on Lendable’s growth ambitions.”

Providing Loans to Businesses

Founded in 2014 by Martin Kissinger and Victoria van Lennep, Lendable.co.uk is on a mission to use technology to make consumer finance work better for thousands of millions of customers. It applies automation and AI to enhance underwriting and offer customers better rates, transparency and service. The platform provides debt asset classes to fintech companies such as banks family offices, among others across the world, to offer credit facilities and financial services to their customers.

Lendable has proven popular with customers because it comes straight from an investor when clients borrow money from the lending platform. Unlike banks that hand out loans from a large amount of money, they look after on behalf of savers. Its platform is super-fast and makes lending as hassle-free as possible. The platform uses institutional capital to fund its services, according to the company. Within a matter of a few clicks, a customer gets her quote. Unlike banks that require paperwork and run expensive branch networks.

Last March, Lendable achieved unicorn status after it obtained backing from Goldman Sachs, a multinational investment bank. With plans to expand its business into the US marketplace, the lending platform is reported to be launching a new credit card product.

Image source: Shutrerstock

Public Pension Funds Eroded by Headwinds from Crypto Winter

Pension funds that have bet on the cryptocurrency market over recent years face difficulties navigating the ongoing crash associated with digital assets.

Caisse de dépot et placement du Québec, Canada’s second-largest pension fund, invested $150 million in Celsius Network LLC last October. In July, the crypto lending platform, Celsius, filed for bankruptcy protection because of “extreme market conditions” that prompted a wider selloff.

The Houston Firefighters’ Relief and Retirement Fund bought $25 million worth of Bitcoin and Ether in October last year. Since the announcement, both cryptocurrencies have dropped by more than 50%.

“Of course, we would have preferred otherwise. But volatility and large swings are expected, “said Ajit Singh, the investment chief at Houston Firefighters’ Relief and Retirement Fund investment.

Over the previous two decades, public pension funds have increasingly invested in less-traditional assets in response to low fixed income.

The recent capital market crash has been painful for investors, especially those who have recently retired or are planning to do so in the next year or two.

The Market Meltdown

Several pension funds and sovereign wealth funds (SWFs) have already invested indirectly in crypto assets through stocks such as Tesla, MicroStrategy, and Coinbase.

California Public Employees’ Retirement System (CalPERS), California’s $441 billion public pension fund, increased the number of its shares in Riot Blockchain, a publicly traded Bitcoin mining firm, in February last year.

In April, a major U.S. asset manager Fidelity Investments in April allowed firms to include Bitcoin investments in their employee 401(k) defined-contribution benefit plans.

Over the two months, important events happened. The global crypto market cap dropped below USD 1 trillion (USD 3 trillion at its peak in October 2021), and the values of cryptocurrencies plunged around 70%.

The plunged values of crypto coins have taken a steep toll on many lending firms and investment funds that deal with those volatile assets. The dreadful incident heightened the risk of losing trust in the industry, creating ease a downward spiral.

Since the U.S. Federal Reserve and other central banks moved to tighten monetary policy, money has flowed back from digital assets. Bitcoin has lost more than 60% of its value since the end of last year.

Such losses have driven many crypto lenders into bankruptcy or forced them to take drastic steps like freezing withdrawals.

Decentralized finance platforms promising big returns have also suffered heavy losses on some investments, with some hurt by the terra crash.

Canadian Pension Fund Achnoledges Investemnt Loss for $200m CAD on Celsius Network

Charles Emond, the Chief Executive Officer of Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), has indicated that the company’s investment in Celsius Network is now considered lost, accounting for 200 million Canadian dollars.

Emond made the revelation while addressing reporters about the company’s financial performance, noting amongst many other reasons that the writing off of the investment, pegged at $150 million, is to stay prudent with its expectations.

“It’s an investment that I consider written off because we always have a cautious bias in our valuations,” Emond says, adding that CDPQ is exploring its legal options for the recovery.

The capital injection into Celsius Network was well applauded at the time, with proponents celebrating the entry of institutional investment into the crypto ecosystem. While he acknowledged regret over the investment, Emond said there was a broad-based consultation before the final decision to inject the funds into the now-bankrupt crypto lender was made.

While not apportioning blame, Emond said he believes the firm made its entry into the crypto industry “too soon in a sector in transition, with a company that had to manage extremely rapid growth, even a growth crisis.”

Despite the situation, Emond said the firm is now looking forward.

“No one at the Caisse, myself included, is happy with the outcome of this file,” regrets Emond. “That said, we must not lose sight of the fact that this is an exception in our venture capital portfolio.”

With an estimated deficit of net liabilities loss of $2.8 billion, Celsius Network is considered one of the most indebted bankrupt cryptocurrency lending platforms.

The startup, led by Alex Mashinsky, was the first to halt withdrawals on its platform far back in June, and without a bailout from at least one of its potential investors, including Goldman Sachs and Ripple Labs Inc, the bulk of the company’s creditors may be forced to take up some losses at the end of the day.