Trump's victory could mean more crypto for Florida retirees' pension funds
11/02/2024 04:01Critics highlight that lobbyists have been hawking crypto to state pension funds, despite the inherent volatility of the asset.
If former president Donald Trump wins the 2024 election, there may be an increase in the crypto assets that Florida retirees are exposed to in their state-run pension funds.
“We have about $800 million in crypto-related investments in our state portfolio,” Jimmy Patronis, Florida’s chief financial officer, told CNBC. “I would not be shocked to be able to see that growing under a Trump administration in the near future… I’m going to continue to push forward to make sure that we're doing everything possible to take advantage of this.”
In recent years, state pension funds have taken an interest in bitcoin in order to diversify retirement portfolios and potentially capitalize on bitcoin’s short-term price jumps. However, rather than directly invest in bitcoin, the majority of these retirement funds are focusing on bitcoin exchange-traded funds (ETFs), which debuted this January, and allow pension funds to gain bitcoin exposure without buying the underlying asset themselves.
In July, disclosure forms showed that Michigan’s state pension fund, which manages $143.9 million in assets for Michigan state employees, took out a $6.6 million investment in ARK 21Shares Bitcoin ETF. Similarly, this past May, Wisconsin’s state pension fund reported it had invested $160 million in two bitcoin ETFs.
These retirement funds are vital for elderly police officers, firefighters, and teachers on the state pension. However, critics argue that lobbyists are pressuring state pension funds to pursue riskier crypto investments, despite the inherent volatility of cryptocurrencies. Even seasoned financial advisers warn that investors should reduce exposure to risky assets as they approach retirement.
Bitcoin lobbying groups, such as the Satoshi Action Fund, have promoted bitcoin exchange-traded funds (ETFs) as offering high returns for investors. They argue that bitcoin's price has the potential to exceed that of more stable assets like gold.
It's an argument that some state pension funds have already bought into. “When managing state pensions for firefighters, teachers, and police officers, it's also essential to prioritize the bottom line and ensure the best return on investment for Floridians,” Patronis wrote in a letter to the state board overseeing state retirement funds to request the addition of more crypto to Florida's pension fund. “This is where the potential of investing in a cryptocurrency, like bitcoin, becomes particularly compelling.”