GuShiio.com Endowments and foundations became one of the first institutional investors to accept cryptocurrencies.
Editor: Felix, PANews
In recent years, with the rise of the cryptocurrency boom, some investors have seen the potential to add to digital portfolios. Endowment funds and foundations, which were still on the sidelines a few years ago, have become more open to investment and have become one of the first institutional investors to accept cryptocurrencies.
Pantera Capital, a California venture capital fund focusing on digital assets, reported that the number of its endowment fund and foundation clients has increased eightfold since 2018.
Endowment funds are designed to provide funds to non-profit institutions such as hospitals, churches or universities. University endowments are pools of funds accumulated by academic institutions, usually in the form of charitable donations. These funds are used to support teaching and research and can be allocated among various assets for investment purposes.
Recently, the one-year-old University of Austin is raising a US$5 million Bitcoin fund for its US$200 million endowment fund. This is the first fund of its kind among U.S. endowments and foundations.
The University of Austin’s goal is to develop a five-year Bitcoin holding strategy. Chad Thevenot, vice president of the University of Austin, said,”We think Bitcoin has long-term value, just as we think stocks or real estate have long-term value.”
In October last year, Emory University in Georgia became the first university endowment fund to disclose Bitcoin ETF holdings. According to filings with the U.S. SEC, the university holds nearly 2.7 million shares of a grayscale Bitcoin mini trust fund worth more than $15 million, in addition to 4,312 shares of Coinbase stock.
In 2018, Yale University’s endowment fund invested in two cryptocurrency venture capital funds, when the price of Bitcoin was less than one-tenth of what it is today. One is managed by Andreessen Horowitz (a16z), and the other is Paradigm founded by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang.
In addition, according to sources, some of the largest college endowments in the United States appear to have been quietly purchasing cryptocurrencies through accounts on Coinbase and other exchanges. Including Harvard University, Yale University, Brown University, the University of Michigan and several other universities.
Britt Harris, former chief investment officer at the University of Texas/Texas A M Investment Management ($78 billion in assets), said that under his leadership, the largest university endowment fund in the United States made “small experimental” investments in cryptocurrency venture capital funds in the early 2020s, viewing it as a “potentially attractive future strategy.”
In addition, Lai of the Rockefeller Foundation said that if the user base of cryptocurrencies “expands and deepens,” it will consider increasing investment in cryptocurrencies.
In addition to college endowments, cryptocurrencies are also becoming increasingly popular among pension funds, indicating a shift in the mindset of the younger generation.
Pension funds such as Wisconsin have previously reported holding Bitcoin ETFs. In addition, the Jersey City Municipal Pension Plan, New Jersey, announced that it will allocate 2% of its assets to ETFs.
According to Bitget Research, as many as 20% of Gen Z and Gen Alpha are willing to receive pensions in cryptocurrency. 78% of respondents said they trust “alternative retirement savings options” more than traditional pension funds, highlighting a major shift towards “decentralized finance and blockchain-based solutions.”
It is worth mentioning that “following the trend” investment has also aroused the vigilance of some people.
“I am very concerned that institutional investors will enter financial assets that are purely speculative in nature and do not provide much hedging compared to other risky assets,” said Eswar Prasad, a professor at Cornell University. “Bitcoin seems to rise and fall with the prices of other risky assets such as stocks, but it is much more volatile.”
Brian Neale of the University of Nebraska Foundation believes that due to the low adoption rate among allocators, he does not believe that cryptocurrencies are an “institutional investable” asset class. Currently, it does not plan to enter the field until more peers join and regulations become clearer. He also called for greater regulatory transparency, such as the U.S. SEC’s guidance on cryptocurrency investment to regulate the industry.
Related reading: BB Research’s depth of holding currency stocks: Deep moment, currency stocks ride the wind
