Cities and States Are Looking Hard at Cryptocurrencies: S&P
(Bloomberg) -- U.S. state and local governments are growing more interested in investing in cryptocurrencies in their pension funds and accepting digital currencies as payments for taxes and services, according to S&P Global Ratings.
On the investment side, the outsized returns that cryptocurrencies have generated during a period of low bond yields have made some pension plans more interested, according to S&P’s Sept. 15 note. Over the 12 months ended Aug. 20, Bitcoin and Ethereum have had respective returns of 326% and 745%, S&P analysts wrote.
While these returns can fluctuate wildly -- in 2018 Bitcoin fell around 75% -- recent gains may make the digital currencies hard for pensions to ignore, S&P wrote. Investing in crypto can boost a pension’s credit risk, because the cash out value for the currency can change fast, S&P wrote.
Some public retirement plans have already started investing crypto-related assets. New Jersey’s Common Pension Fund D has small holdings in blockchain and digital holding companies, according to S&P. Two pension plans in Fairfax, Virginia have invested in crypto assets, including digital currencies and related companies.
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