Crypto News– Fidelity reports: Pension plans are gradually considering the prospect of investing in cryptocurrency assets, albeit at a cautious pace.
During an event in London, Manuel Nordeste, Vice President at Fidelity Digital Assets, noted that defined benefit plans and other pension funds are just beginning to broach discussions with their investment committees regarding crypto assets.
While family offices and high-net-worth individuals are already engaging in crypto investments, larger institutional investors are now starting to explore these opportunities, representing a notable shift in the market landscape.
In its infancy, Fidelity Digital Assets primarily interacted with family offices, specialized asset managers, and hedge funds. However, discussions now extend to larger institutional investors, corporates, and other major players.
Fidelity Reports Pensioners Exploring Crypto in 4.7 Trillion Dollars Opportunity
A survey conducted by Fidelity Digital Assets revealed a significant contrast in sentiment between high net worth individuals and pension plans regarding digital assets. While 80% of high net worth individuals viewed digital assets positively, only 23% of pension plans shared this sentiment. Furthermore, 48% of high net worth individuals were invested in digital assets, compared to a mere 7% of pension plans.
The agility of smaller firms enables them to navigate risks more readily, as they often possess flexible investment mandates. In contrast, pension plans face more stringent requirements and a lengthier decision-making process before entering the market. This dichotomy underscores the cautious approach adopted by institutional investors towards cryptocurrency investments.
On Thursday, Fidelity’s competitor BlackRock announced its anticipation of institutions, including pension funds, venturing into trading the Bitcoin spot market through recently approved exchange-traded fund (ETF) products by the US Securities and Exchange Commission (SEC).
Spot Bitcoin ETFs, which are offered by both BlackRock and Fidelity, serve as a more accessible avenue for investors to enter the Bitcoin market compared to traditional cryptocurrency exchanges. Given their familiarity as investment products, these ETFs may assuage concerns among pensioners regarding cryptocurrency investments.
In February, legislators in Arizona proposed a resolution urging state pension plans to monitor Bitcoin ETFs and other digital asset ETFs, contemplating their inclusion in investment portfolios. The vast size of America’s public pensions, totaling $4.7 trillion in retirement savings for teachers and firefighters in 2023 according to the Urban Institute, presents a compelling opportunity for asset inflows.
Most of these pension funds, with 71% allocated to equities and 21% to debt, could potentially facilitate a steady influx of physical coins, as suggested by Darius Tabai, a former global head of metals trading at Merril Lynch and Credit Suisse.
Despite a 2022 survey revealing that 94% of public pension plans had some exposure to cryptocurrency, retirees in America largely remained unaffected by the bearish market conditions of 2023.
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