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Government pension funds embrace crypto
Allie Itami, an attorney at Lathrop GPM, told Cointelegraph that it is easier for public pension plans to allocate a portion of their assets to cryptocurrencies than it is for private pension plans, which must comply with fiduciary regulations under the Employee Retirement Income Security Act of 1974 (ERISA).
According to Itami, the Employee Benefits Security Administration (EBSA), which enforces ERISA regulations, cited the new and volatile nature of cryptocurrencies as the primary reason it has warned against private retirement plans investing in digital assets. Itami explained:
“Regulators called the Department of Labor and specifically the agency that enforces ERISA (EBSA) and they issued some compliance assistance guidance in 2022 that was very skeptical about cryptocurrency in ERISA-covered plans. That prevented ERISA-covered retirement plans from adding cryptocurrency.”
This strict application of ERISA regulations and the resulting fiduciary responsibility placed on private pension managers means that capital inflows from retirement investment accounts into crypto markets will likely continue to be dominated by state pension plans until the guidance is reversed.
EBSA’s 2022 guidance letter. Source: Allie Itami
Related: 'Material impact' of Bitcoin investment draws attention from pension funds
Government pension funds embrace crypto
Several state and municipal pension funds in the United States already have exposure to crypto. In May, the Wisconsin State Investment Board (SWIB) announced a $164 million investment in Bitcoin ETFs.
Michigan started down this path in July by announcing a $6.6 million investment in Bitcoin ETFs, and then increased its exposure to digital assets by purchasing 460,000 shares each of the Grayscale Ethereum Trust and Grayscale Ethereum Mini Trust in November 2024.
Florida’s chief financial officer, Jimmy Patronis (the official responsible for managing the state’s pension funds), is now pushing for Bitcoin (BTC) to be included in the state’s retirement programs. Patronis highlighted Bitcoin’s “digital gold” function in this letter urging state pension funds to consider exposure to Bitcoin.
"Crypto is not going anywhere," Patronis said later on CNBC, outlining Bitcoin's merits as a hedge against inflation and a resistance mechanism against central bank digital currencies.
