State Pension Plans Lead In Cryptocurrency Investments

According to Cointelegraph, state pension plans in the United States are increasingly allocating assets to cryptocurrencies, unlike private pension plans that face stricter regulations under the Employee Retirement Income Security Act of 1974 (ERISA). Attorney Allie Itami from Lathrop GPM highlighted that the Employee Benefits Security Administration (EBSA), responsible for enforcing ERISA, has expressed skepticism about private pension plans investing in digital assets due to their volatile nature. This caution stems from a 2022 compliance guidance issued by the EBSA, which has deterred ERISA-covered pension plans from incorporating cryptocurrencies into their portfolios. The stringent enforcement of ERISA regulations and the associated fiduciary liability have limited the involvement of private pension managers in the crypto market. Consequently, state pension plans are expected to continue dominating capital inflows into cryptocurrencies from retirement investment accounts unless there is a change in the guidance. Several state and municipal pension funds have already ventured into the crypto space. For instance, the State of Wisconsin’s Investment Board (SWIB) announced a $164 million investment in Bitcoin ETFs in May. Similarly, Michigan disclosed a $6.6 million investment in Bitcoin ETFs in July and expanded its digital asset exposure in November 2024 by acquiring shares in the Grayscale Ethereum Trust and the Grayscale Ethereum Mini Trust. Florida's chief financial officer, Jimmy Patronis, is advocating for the inclusion of Bitcoin in the state's pension programs. He described Bitcoin as "digital gold" and urged state pension funds to consider exposure to it. Patronis emphasized Bitcoin's potential as a hedge against inflation and a safeguard against central bank digital currencies during an appearance on CNBC, asserting that "Crypto is not going anywhere." This growing interest from state pension funds underscores a significant shift in the investment landscape, as they seek to capitalize on the potential benefits of digital assets.