Anthony Pompliano — the founder of Morgan Creek Digital venture fund — recently told Bloomberg that two Virginia pension funds have become anchor investors in the new $40 million blockchain fund by Morgan Creek Digital — in what is likely a first in the U.S.
The Virginia pension funds represent the Fairfax County Retirement Systems which constitutes several public service offices — including the police department. The new fund by Morgan Creek Digital will invest in blockchain-focused and digital asset companies, with a small portion in liquid cryptocurrency investments like Bitcoin and Ether.
Pension Fund Joins Other Institutions Jumping Into Crypto
The Fairfax County, Virginia pension fund represents $1.2 billion in assets for the county’s public workers and follows on the heels of major institutions dipping their toes into digital assets.
Last October, Yale — whose total assets are worth $29.4 billion — invested a sizeable portion of its fund into digital assets. Pompliano cited Bakkt and Coinbase as two of the primary investment targets for the fund, which will focus on cryptocurrency companies as well.
Public pension funds in the U.S. are enormous, reportedly accounting for $822 billion in unfunded accrued liabilities in 2012. Fairfax County resides just outside of the nation’s capital, Washington DC, and contains a population of more than 1.1 million people, presenting a considerable pension fund that is anchoring Morgan Creek’s new venture capital.
Katherine Molnar — the Fairfax County police fund chief investment offer — cited how the investment choice was a chance to be opportunistic with a rapidly evolving ecosystem of digital assets. Pompliano told Bloomberg:
“The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.”
Morgan Creek initially sought $25 million but reached $40 million following their pitch, which Bloomberg says referenced a future of traditional financial assets ubiquitously represented by digital tokens. Morgan Creek is also invested in companies like BlockFi, Harbor, and TrustToken.
Pension funds are traditionally conservative in their investments and are becoming even more conservative. The entrance of the Virginia pension fund into the digital currency sector is another signal that the markets are maturing and the measured risk by institutions hesitant to get their feet wet is fading.
It remains unlikely that a suite of pension funds will quickly follow the Fairfax County fund into digital assets. Nonetheless, the development is a significant step towards broader acceptance of cryptocurrencies and digital assets by the mainstream.