US-based digital asset firm Morgan Creek Digital has raised $40 million in recent fundraising efforts, according to a February 12 article on The Next Web (TNW). Per Forbes, the funds will be used to develop the Morgan Creek Blockchain Opportunities Fund, which will invest in blockchain ecosystem projects and virtual currency.
According to TNW, the largest investments came from two public pension funds: the Fairfax County Police and Fairfax County Employee's Pension plans. Additional contributions were made by a "hospital system, a private foundation, an insurance company, and university endowment."
According to Forbes, the fund has already invested some of the money in blockchain-based startups such as the Bakkt exchange platform and TrustToken, as well as established firms such as Coinbase. As much as $4 million could be used to directly buy cryptocurrency.
Do money managers feel confident enough in the cryptospace to risk people's retirement plans on digital currency? Last April, CNBC published an article that speculated 2018 would be the year that "global pension and endowment funds" invest heavily in cryptocurrency.
In August 2018, the US Securities and Exchange Commission (SEC) issued an official warning against investing in cryptocurrency as the main way to build one's retirement fund. The SEC cited concerns of investors losing their retirement money due to the volatility of crypto prices and the risk of accidental investment in fraudulent initial coin offerings.
In December of last year, Morgan Creek Digital founder Anthony Pompliano, undeterred by the SEC's comments, published a blog post outlining his reason why every pension plan should be investing in crypto. Pompliano discussed the funding crisis facing many pension plans and argued that because bitcoin is a "non-correlated" asset that has an "asymmetric return profile," investing in cryptocurrency could "materially change the performance of each pension fund, which ultimately changes the future viability of retiring for hundreds of millions of people." Nonetheless, he admitted that investing in crypto is risky and pension fund managers should only invest what they can afford to lose.