World’s third-largest pension fund, the National Pension Service of South Korea has surprised the world of crypto. It has been revealed that the pension fund bought approximately 26 billion won ($20 million) worth of Coinbase stocks. This move shows how pension funds are adapting to emerging market trends.
As per a U.S. Securities and Exchange Commission (SEC) filing on November 16th, the National Pension Service acquired 282,673 shares of Coinbase during the third quarter. The valuation of those stocks stood at $19,934,100. Coinbase is officially a part of the fund’s huge $800 billion asset portfolio.
The National Pension Service clarified its stance despite historic caution regarding virtual assets. They said that the investment in Coinbase is not a signal that the fund is ready to have cryptocurrencies in its strategy. Contrastingly, the fund criticised itself in 2021 for indirectly involving itself in virtual asset-related businesses.
Why Coinbase for the investment?
Choosing Coinbase for this $20 million investment must The leading U.S. asset exchange has been on Nasdaq since April 2021. And, the exchange handles a large chunk of the net volume in the crypto market which makes it an attractive investment.
The National Pension Service’s average purchase price per Coinbase share stood at $70.5. the pension fund is reaping substantial profits as Coinbase recently closed at $98.15. It is an impressive 40% return on investment in just one quarter since they invested.
American pension funds also invest in Crypto
One of the biggest asset managers in the world, Fidelity, has always supported the use of Bitcoin. Whether it be in mining or to let their clients to include crypto in their retirement portfolio.
Employees were permitted to deposit Bitcoin into their 401(k)s (retirement accounts) at Fidelity Investments, the leading provider of retirement plans in the United States. However, lawmakers and regulators have raised concerns about this choice.
In October 2022, Senators Pat Toomey (R-PA), Tim Scott, and Representative Peter Meijer introduced the “Retirement Savings Modernization Act.” It will let workers diversify their assets in plans like 401(k). Their motive was to increase Americans’ retirement savings.
However, later in November, Attorney General James wrote in a letter that “that recent high-profile failures of crypto companies make digital assets unsuitable retirement investments.”
This calculated move by South Korea’s investment giant aligns with the broader financial landscape. Traditional institutions are cautiously navigating the nascent crypto sector. They simply want to strike a balance between risk and reward where a small allocation to a risky asset may reap heavy rewards.