Japan’s $1.5 Trillion GPIF Pension Fund Eyes Bitcoin Amidst Surging Market

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Japan's $1.5 Trillion GPIF Pension Fund Eyes Bitcoin Amidst Surging Market
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Japan’s Government Pension Investment Fund (GPIF), managing a staggering $1.5 trillion, has initiated inquiries into diversifying its portfolio, eyeing assets like Bitcoin in addition to gold, forests, and farmland.

The latest move is a call for information and doesn’t signify an immediate expansion of investment targets, including Bitcoin.

World’s Largest Pension Fund Explores Bitcoin

Founded in 2006, GPIF is the largest pool of retirement savings in the world. The administrative agency established by the Japanese government has announced fresh long-term investment strategies.

The latest move is prompted by significant shifts in the economy and society, alongside rapid technological advancements, according to the official document released on March 19th.

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As such, the GPIF is initiating a comprehensive five-year investigation scheme aimed at identifying efforts to broaden investment horizons, prioritizing sustainability and risk mitigation. The pension fund has called for data with regard to various potential diversification tools. This encompasses assets categorized as “illiquid” and currently absent from its holdings, such as crypto assets like Bitcoin, precious metals like gold, and other assets.

GPIF currently directs its investments toward different sectors, including domestic bonds, domestic stocks, foreign bonds, foreign stocks, private equity, real estate, and infrastructure. Hence, the decision to explore Bitcoin appears to be crucial at a time when investor sentiment on the asset class has improved vastly following the 2022 debacle.

Global Pension Funds Navigate Crypto Investments

An April 2022 survey conducted by the CFA Institute discovered that 94% of sponsors of state and government pension plans had ventured into crypto investments. The survey did not detail the specific types of crypto-related investments these respondents were engaging in. Additionally, the report revealed that 62% of corporate-defined benefit plans also directed funds into this sector.

However, there were notable shifts after the FTX collapse, which exacerbated the crypto market downturn. The Ontario Teachers’ Pension Plan, which faced scrutiny for its investment after FTX slid into bankruptcy in November 2022, wrote off its $95 million investment in the now-defunct crypto exchange. In response to this setback, the pension fund stated its intention to stay away from another crypto investment.

On the other hand, South Korea’s National Pension Service (NPS), ranked among the largest pension funds globally, acquired approximately $20 million worth of Coinbase stock (COIN) in Q3 2023. This decision drew criticism from the South Korean National Assembly due to the fund’s indirect involvement in a digital asset business.

Responding to the backlash, the pension fund clarified that its investment was solely in the crypto exchange and expressed no intent to allocate funds to crypto.

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