Cryptocurrencies have become so integrated into everyday life that they are no longer seen as the exclusive domain of the “tech-savvy youth.” Funds and exchanges have quickly recognized that entrepreneurs showing significant interest in digital assets today are unlikely to lose that interest in their later years. Furthermore, it's unlikely they would forgo pension benefits in the format they've been accustomed to for half their lives. Here’s a look at the emerging trend of pension funds investing in cryptocurrencies.
The Early Steps Towards Crypto Pensions
The idea of a “cryptocurrency pension” began to take shape in 2019. Back then, before the COVID-19 pandemic, Bitcoin’s price had surged 2.5 times, and the DeFi boom was just a year away. Some pension funds in various countries decided to explore this promising new asset, and it turned out to be a nice move.
The introduction of spot Bitcoin ETFs further boosted the appeal of cryptocurrencies among financial organizations and traditional pension funds.
A spot Bitcoin ETF is an exchange-traded fund where Bitcoin is the underlying asset. It allows investors to profit from cryptocurrency without actually owning it. The ETF tracks the current market price of Bitcoin and involves the delivery of BTC as the base asset.
Which Countries Were First to Show Interest?
By 2024, global pension funds had collectively invested hundreds of millions of dollars into the crypto market. The most active countries in this trend are as follows:
- Japan
The Government Pension Investment Fund (GPIF) of Japan is the largest pension fund in the world, with assets exceeding $1.5 trillion. The fund is currently exploring options to diversify its investment portfolio. While GPIF has primarily invested in traditional assets, the move towards incorporating cryptocurrency strategies has been well-received due to significant economic and technological changes. As of March 2024, the fund began exploring low-liquid assets, including Bitcoin.
- Norway
The Norwegian Government Pension Fund is not yet ready to directly invest in cryptocurrencies, but it has taken notable steps in that direction. It holds shares in companies such as MicroStrategy, Coinbase, MARA (formerly Marathon Digital), and Block Inc, which own physical Bitcoin.
According to K33 analyst, Vetle Lunde, the Norwegian fund is an indirect holder of over 2,440 BTC. Since the beginning of 2024, the fund’s balance has increased by an additional 938 BTC, partly due to the rise in acquired shares. The Norwegian fund ranks second in terms of crypto assets held, with approximately $1.3 trillion in assets.
- South Korea
South Korea is a country that anticipates profit potential far in advance. The National Pension Service of South Korea is the third-largest pension fund globally. Recently, it purchased $33.7 million worth of MicroStrategy shares, among other investments.
The National Pension Service has been actively investing in crypto-related companies for some time. It owns over 200,000 shares of Coinbase, valued at over $51 million, and also holds $31.5 million worth of Roblox shares. By the end of February 2024, the service’s total assets amounted to 1 trillion won (approximately $777 billion), making it a major cryptocurrency investor in South Korea.
- United States
In the U.S., working with digital assets is complicated by an unstable regulatory environment, but this does not completely block cryptocurrency activities. For example, in late June, the Michigan State Pension Fund invested around $7.3 million in an Ark Invest Bitcoin ETF.
In late July, Jersey City Mayor Steven Fulop announced that the City Pension Fund would invest in a Bitcoin ETF, pending necessary licenses and regulatory approvals. Similar initiatives are also being considered in the Arizona Senate, where proposals to include Bitcoin ETFs in state pension fund portfolios are being actively reviewed.
Conclusion
Overall, by 2024, investments in Bitcoin are increasingly seen as fundamental rather than innovative. Regulatory clarity and widespread adoption are encouraging even state funds to take an interest. The investments by pension funds reflect a changing attitude towards cryptocurrencies, signaling greater acceptance and growing public support.
This shift shows that cryptocurrencies are becoming more mainstream, with people recognizing their long-term potential. As pension funds start including Bitcoin in their portfolios, they're not just exploring new ways to grow their investments – they're also keeping up with the times. This trend highlights how crypto assets are becoming a regular part of our financial future, showing that the world is becoming more open to the possibilities that cryptocurrencies offer.
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “Segregated Witness (SegWit) in Bitcoin” and “Top Cryptocurrency Mining Companies in the U.S.”.
