In what is a great shift from the status quo, two pension funds in Virginia have invested in a blockchain fund. The two are anchor investors in a $40 million venture capital fund by Morgan Creek Digital.
The investment by the pension funds is their first in the blockchain and crypto industry. Previously, traditional capital has stayed away from the industry. Market volatility, unestablished regulatory framework and market manipulation have been the most common impediments. However, in making the investment, the two pension funds from Fairfax County, Virginia could spark a new revolution that could bring billions of dollars to the industry.
Fairfax County Retirement Systems has three separate benefit plans. Two of these, which collectively manage $5.1 billion in assets, invested in the fund.
The Morgan Creek Blockchain Opportunities Fund is structured like a traditional venture capital fund, Anthony Pompliano told Bloomberg. Pomp, as he is popularly known, is one of the founders of Morgan Creek. The fund will invest in the equity of companies in the crypto and blockchain industry. It will also use a small percentage to invest in liquid cryptos such as Ethereum (ETH) and Bitcoin Core (BTC).
“There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable. The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.”
The chief investment officer of one of the funds concurred with Pomp on the opportunities that blockchain presents. Katherine Molnar stated that the industry presents an “attractive asymmetric return profile.” This means that it has put a safe distance between it and the traditional investments.
A paradigm shift
The fund has already invested a ‘material amount’ in select blockchain startups. The majority of the investment so far has been on Bakkt, a regulated institutional trading platform. Bakkt is owned by NYSE’s parent company, the Intercontinental Exchange. Microsoft and Starbucks are also partners in the venture. The fund has also invested in crypto lending startup Blockfi and social banking platform Good Money.
Speaking to Forbes, Pomp further praised the progressive thinking applied by the leaders of the two pension funds. He said, “These are incredibly intelligent, long-term thinking, permanent capital allocators. And so, they have a very different mindset than retail investors or some other capital allocators.”
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