The First Public Pension Funds Buys Bitcoin Directly
To investors, It was confirmed yesterday that the Houston Firefighters Pension Fund has officially become the first pension fund in the United States to purchase, and directly hold, bitcoin in their portfolio. As many of you will remember, two public pension funds from Fairfax County in Virginia previously invested in the first two Morgan Creek Digital funds. They were the first public pension funds to allocate to the industry. These were venture funds that had approximately 15-20% invested in bitcoin. After Fairfax, there was only one other pension fund that I’m aware of that had invested in the industry - the Municipal Employees’ Retirement System of Michigan allocated to Dan Tapiero’s 10T Holdings growth equity fund. Each of these three public pension funds were investing in venture capital style funds, even if they had some bitcoin exposure, simply because there was no clear framework for them to safely place the digital assets directly in their portfolio. Does bitcoin go in their currency allocation? Maybe commodities? Or maybe it is digital real estate? There has been no clear answer. So venture funds made sense because everyone understood that the allocation went in the venture capital bucket. This is all changing though. Bitcoin and cryptocurrencies are maturing to the point where public pension funds, along with financial institutions and corporations, are all comfortable holding the assets directly. They understand which bucket in their asset allocation to put them into. And the infrastructure is now available where institutions don’t have to worry about custody, insurance, or accounting support. The market has matured significantly since 2018. Even with all this progress though, it is still a big moment when the very first public pension puts bitcoin on their balance sheet. Eventually every pension fund is going to do it. I’ve been saying this for years. In this letter from December 24, 2018:
I then went on to explain why bitcoin was a potential solution:
The argument has always been simple. Bitcoin is a non-correlated, asymmetric asset that would allow a pension fund to make a small allocation, while still having an outsized impact on the portfolio. This was true when bitcoin was around $3,500 and it is true when bitcoin is trading around $65,000 today. We still have a long way to go in educating public pension investment teams, their investment committee board members, and the general public who is made up of pensioneers. But we’re making great progress towards the inevitable end. Pension funds are not going to be able to fulfill their obligations, so they have to do something different. I like our chances. The Houston Firefighters Pension Fund should get immense congratulations for their courage and conviction in this decision. Hope each of you has a great day and I’ll talk to everyone on Monday. -Pomp SPONSORED: Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today. THE RUNDOWN:Peter Thiel Tells Crowd Where He’d Look for Elusive Bitcoin Founder Satoshi: Peter Thiel told a crowd of a few hundred people assembled at a Miami conference where he’d look for clues about the real identity of Satoshi Nakamoto, the now almost mythical pseudonymous founder of Bitcoin -- a beach in the Caribbean. “My sort of theory on Satoshi’s identity was that Satoshi was on that beach in Anguilla,” the technology billionaire and self-described libertarian said Wednesday, recounting an early meeting with the founders of E-Gold Ltd., a now defunct digital currency that was indicted by the U.S. Justice Department in 2007. “I met them on the beach in Anguilla in February of 2000. We were beginning the revolution against the central banks on the beach in Anguilla. We were going to make PayPal interoperable with E-Gold and blow up all the central banks.” Read more. Bitcoin’s Inflation Narrative More Compelling Than ETF Fever, JPM Says: This week’s launch of the ProShares Bitcoin Strategy Exchange-Traded Fund may have aided the cryptocurrency’s recent price surge to an all-time high, though the perception of bitcoin as an inflation hedge over gold is probably a bigger factor, a JPMorgan strategist wrote Thursday. In its first two days of trading, BITO amassed assets of over $1 billion, according to ProShares. Read more. Robinhood’s Waitlist for Crypto Wallet Has More Than 1M Customers: The waitlist for Robinhood’s crypto wallet is now more than one million customers long, Robinhood CEO Vlad Tenev said at CNBC’s Disruptor 50 summit on Thursday. Robinhood announced last month it was planning to roll out a crypto wallet in early 2022 that would allow customers to trade, send and receive cryptocurrencies, as well as transfer them to hardware wallets. Read more. Walmart Has Quietly Begun Hosting Bitcoin ATMs: Walmart, the world’s largest company by revenue, is letting customers buy bitcoin at dozens of its U.S. stores. Shoppers can purchase the cryptocurrency at Coinstar machines inside the retailer’s cavernous big box stores. A CoinDesk editor verified that the service works, buying a small amount of BTC at a Pennsylvania Walmart on Oct. 12. Read more. LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE Kevin O’Leary is a Canadian businessman, author, politician, and television personality. He is a Shark on ABC’s hit show Shark Tank and has had numerous previous business successes, including when he sold The Learning Company to Mattel for $4.2 billion in 1999. In this conversation, we discuss bitcoin ETF, monetary policy, inflation, fixed income managers, international money interest, regulation, decentralized finance, and stablecoins. LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE Podcast SponsorsThese companies make the podcast possible, so go check them out and thank them for their support!
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