CalPERS Candidates Divided on Crypto Investments: Insights into the Future of Pension Funds
Overview of CalPERS Forum
The California Public Employees’ Retirement System (CalPERS) held a forum recently where six candidates for its Board of Administration expressed a wide range of opinions regarding cryptocurrency investments. This discussion is particularly significant as CalPERS currently holds a substantial number of shares—410,596—of MicroStrategy, valued at approximately $165.9 million, offering the fund significant indirect exposure to Bitcoin.
Candidates’ Perspectives on Cryptocurrency
Varied Stances on Direct Investment
During the forum, candidate opinions on direct Bitcoin investment within the $506 billion portfolio varied considerably:
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Strong Opposition: Incumbent David Miller firmly opposed cryptocurrency investments, stating, “Cryptocurrency should not have a seat on our board and never should.” His remarks specifically targeted challenger Dominick Bei, who has established a Bitcoin educational nonprofit.
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Questioning Indirect Exposure: Bei countered Miller’s stance, questioning why CalPERS maintains indirect crypto exposure through MicroStrategy while opposing direct investment. He noted that MicroStrategy holds over 636,505 BTC, valued at over $70 billion, making the company a prominent choice for institutional crypto exposure.
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Cautious Considerations: Challenger Troy Johnson adopted a balanced approach, expressing caution about crypto but asserting, “I wouldn’t close the door entirely on it.” He emphasized his wariness of hyper-sensitive investments.
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Full Rejection: Meanwhile, Steve Mermell vehemently rejected the idea of including cryptocurrency in CalPERS, comparing it to historical financial failures like the Orange County bankruptcy and Enron, dismissing it as “opaque” and dangerous.
Blockchain Technology vs. Cryptocurrency
Not all candidates dismissed the potential of blockchain technology. Incumbent Jose Luis Pacheco recognized blockchain as “an emerging technology with promise,” suggesting CalPERS should explore potential partnerships and research opportunities around this technology. In contrast, other candidates remained firm in their condemnation of direct crypto investments.
Insights from Industry Experts
Industry experts have shared insights into the situation. Kadan Stadelmann, CTO of Komodo Platform, argued that Bitcoin volatility should not deter pension funds, especially in today’s inflationary climate. He criticized CalPERS for being overly cautious and suggested that they should consider holding Bitcoin directly.
Comparison with Other State Pension Funds
Several other state pension funds are increasingly embracing cryptocurrencies:
- Michigan’s state pension has tripled its Bitcoin ETF holdings to $11.4 million in the second quarter.
- Wisconsin’s Investment Board holds over $387 million in Bitcoin ETF shares.
- Florida’s retirement system has maintained 240,026 shares of MicroStrategy worth approximately $97 million.
The Road Ahead for CalPERS
CalPERS’ upcoming November election will be pivotal in determining whether the fund continues its current approach of indirect exposure to cryptocurrencies or opens discussions about direct digital asset investments. The divergence among candidates reveals a broader conversation about the role of cryptocurrencies in traditional finance.
Conclusion: The Significance of the Debate
The dialogue surrounding CalPERS and cryptocurrency investments highlights a crucial juncture for pension funds navigating the evolving landscape of digital assets. With mixed opinions and varying degrees of openness to potential investments, the outcome of the November elections could reshape CalPERS’ investment strategy moving forward.
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