Listen to our posts
Fairfax County Employees’ and Police Retirement Systems have invested in Morgan Creek Blockchain Opportunities Fund.
Morgan Creek Capital’s Anthony Pompliano has a great podcast which I listen to on the regular. On a recent episode with the CEO of Binance, they discussed how a police pension fund had invested some of their capital into Crypto.
While we have heard for awhile that traditional institutions were coming to Crypto, I can think of a no more traditional institution then a police pension fund. These funds are how retired officers and employees get paid through their retirement, and depending on the options, also pay out to spouses and family members. As many of you know, the public pension funds across the United States are in trouble. They are vastly underfunded, much like the social security system. It makes sense that a pension fund would be looking for a higher rate of return and take note of Crypto and its potential.
The irony of police investing in something that law enforcement typically says is used only by criminals was not lost on Pompliano. He talked about how Crypto Twitter was making references to the popular show Billions, and the episodes where the police pension fund invested with Bobby Axelrod.
On a side note, Billions is a great show and you should go watch it.
I believe this is a great step to legitimizing the Crypto sector. It might even help to push the SEC to approve those Bitcoin and Ethereum ETF’s.
In total, the Virginia retirement system placed $21 million into the fund. $10 million is from the county employee’s retirement fund, while $11 million is from the police officer’s fund. Representing 0.3% and 0.8% of the funds’ total assets, respectively.
After being pressed, Fairfax County released a statement about the investment. They of course used Blockchain in the headline but did admit that a certain percentage of the investment could be, in fact, in Cryptocurrency. While the crypto investment portion might only be 15% of the total fund, it is still something.
The following excerpt is a press release from the County of Fairfax website:
You may have read or heard that the Employees’ and Police Officers Retirement Systems have invested in something called Blockchain Technology. Given that this technology is what has been used to create and run the cryptocurrency markets, you may be concerned that these are investments in bitcoin or other electronic currencies. To help you understand what these investments really are, the Investment Team and I have provided some clarification as follows:
What is Fairfax County Invested In?
The Employees’ and Police Retirement Systems have invested in Morgan Creek Blockchain Opportunities Fund, which is one of a number of investment funds that Morgan Creek Asset Management manages. Morgan Creek is based in Chapel Hill North Carolina and has a total of $1.4 billion in assets under management.
How much has Fairfax Invested in the Blockchain Opportunities Fund?
The Employees’ Retirement System has committed to an investment of $10 million, which represents 0.3% of the total assets. The Police Officers Retirement System has committed to an investment of $11 million, which represents 0.8% of total assets.
These investments were deliberately sized to be a small portion of each system’s assets, given that the blockchain technology industry is still in its early stages.
Is This Just an Investment in Bitcoin?
No, quite the contrary in fact. At least 85% of the Morgan Creek Blockchain Opportunities Fund will be invested in blockchain technology firms. As such, this is very similar to other private equity investments made by Fairfax’s three retirement systems. No more than 15% of the funds will be invested in actual cryptocurrencies and, to-date, the Fund has no exposure to any cryptocurrencies.
How Was This Investment Vetted?
As with any of the retirement systems’ investments, significant time and effort was spent researching the firm and the fund.
It will be interesting to see what other funds, if any, follow suit. I would assume that there might be some prior people connections that made this happen or opened the doors. Perhaps Morgan Creek just pitched them blindly, but my guess is someone made the introductions. It is great to see these steps being taken by both sides and Morgan Creek pushing the boundaries of who is investing in Crypto.
So there it is. Public pension funds are taking an interest in Bitcoin and Crypto. Hopefully they get some good returns and we see many others follow their lead!