Canada’s Largest Pension Fund Gets Cold Feet on Crypto

8 December 2022, 09:00 GMT+0000
Updated by Kyle Baird
8 December 2022, 09:00 GMT+0000
In Brief
  • CPP Investments ends efforts to research crypto.
  • Firm manages $388 billion for 20 million Canadians.
  • Several similar Canadian pension funds have written off their crypto losses.
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The biggest pension fund in Canada has given up on its crypto research. The move comes during a deepening crypto winter and a year of contagions and collapses.

On Dec. 7, it was reported that Canada’s biggest pension fund, CPP Investments, will no longer be studying investment opportunities in the digital asset sector.

According to Reuters, the firm declined to give a reason but said it had made no direct investments in crypto.

Crypto markets have dumped more than 70% since their peak levels just over a year ago. However, instead of seeking bear market bargains and opportunities, the pension firm has got cold feet.

Canadian Pension Fund Crypto Losses

According to the report, the firm manages around $US388 billion for roughly 20 million Canadians. Furthermore, the move follows comments by CPPI chief executive John Graham earlier this year when he expressed caution.

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The firm’s Alpha Generation Lab, which researches emerging investment trends, was formed in 2021 to investigate crypto. However, Graham has been skeptical, stating that FOMO (fear of missing out) wasn’t a strong enough reason to invest in crypto.

“You want to really think about what the underlying intrinsic value is of some of these assets and build your portfolio accordingly,” he said in June.

Canadian pension funds are not prohibited from investing in crypto. Nevertheless, the collapse of the FTX exchange and ecosystem has left many with burnt fingers.

As reported by BeInCrypto, the Ontario Teachers’ Pension Plan has written off its $69 million investment in FTX. However, the investment represented less than 0.05% of the firm’s total assets of around $176 billion.

Canada’s second-largest pension fund, Caisse de dépôt et placement du Québec (CDPQ), has also been stung this year. The firm wrote off a $109 million investment in bankrupt crypto lending firm Celsius earlier this year.

The Ontario Municipal Employees Retirement System (OMERS) has also invested in crypto businesses. However, according to the report, the firm, which manages $88 billion, exited them all in 2020.

Canada's Conservative Party Elects Pro-Crypto Leader

Crypto Is a Long-Term Investment

Public pension funds have largely avoided crypto investments in the United States.

However, several have venture capital arms that have invested in crypto-related companies. This year’s contagions have been caused by centralized companies and the people behind them – not crypto.

Rather than investing in a company, it may be a better strategy to buy and hold the physical assets, as MicroStrategy does. Granted, it would face heavy losses selling at the bottom, but pension funds are long-term investments.

For example, buying Bitcoin on this date in December 2019 would have yielded a 124% return in just three years if sold today.

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