USD 6.8B Pension Fund to Invest in Crypto Lending Market

Indicating that some major financial players have not been scared away from cryptoassets by the ongoing market downturn, the Fairfax County Retirement Systems, a US pension fund with assets totaling USD 6.8bn, has unveiled it is looking to invest in crypto lending markets to ramp up its returns.

“Some of the yields that you’re able to achieve in a yield farming strategy are really attractive because some of the people have stepped back from that space,” Katherine Molnar, Chief Investment Officer (CIO) of the Fairfax County Police Officers Retirement System, told the Financial Times.

The fund’s CIO said that “for those that are still willing to provide liquidity, decent profit seekers, they’re actually able to earn more attractive yields at the moment”.

The pension fund recently injected USD 35m each with the Parataxis Capital’s digital yield fund and VanEck’s new finance income fund, which is to generate income for investors via short-term lending arrangements with crypto asset entities.

The latest development does not mark the fund’s first venture into blockchain-related investments. Its two subsidiaries, the USD 5bn Fairfax County Employee Retirement System and the USD 1.8bn Fairfax County Police Officers Retirement System, first invested USD 10m and USD 11m, respectively, into the Morgan Creek Blockchain Opportunities Fund in 2019. The decision was made roughly a year after their managers had first heard about cryptoassets and the opportunities they present to investors.

“We were at a conference and we heard an academic who teaches a course on the topic speak,” according to Molnar. “We were really intrigued by the promise of the technology and its products.”

“We are still convicted in our original thesis,” she was quoted as saying. “Things will bounce back and the stronger technologies will probably survive.”

Pension funds represent some of the traditional financial institutions that have an increasingly favorable approach to crypto investments. A June 2022 report by international consultancy PwC indicates that, despite the current market volatility, a rising number of US hedge funds invest in cryptoassets. Of traditional hedge funds surveyed, some 38% were investing in digital assets that month, compared to 21% a year earlier.
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