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The State Investment Committee invests $187 million in cryptocurrency funds
The State of Wisconsin Investment Board is the first public institution in the country to invest in cryptocurrency.
The board invested a total of $187.1 in funds and companies associated with bitcoin and other cryptocurrencies, according to a May 14 quarterly filing with the United States Securities and Exchange Commission.
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The State of Wisconsin Investment Board manages the assets of the Wisconsin Retirement System, the State Investment Fund and other funds.
Cryptocurrency investments represent only a small share – around one tenth of 1% – of the above $156 billion in assets at the end of 2023.
As such, it’s a relatively small but still speculative bet, said Bob Bukowski, managing partner of Alpha Investment Advisorya Milwaukee-based consultant for pension programs, endowments and large pension plans.
Burkowski said the investment committee will likely be asked, “Why didn’t you have any of this?” if bitcoin doubles or triples in value and the investment advice had not invested in the cryptocurrency.
“On the other hand, if it gets to zero, one-tenth of 1% means nothing to them,” Bukowski said. “To me this doesn’t seem like a full-scale position, it seems like, ‘we need to have some of this so that if it works, we look good.’”
He said a 1% or 5% investment would make it a sizable bet on the cryptocurrency.
SEC opens doors with approval of cryptocurrency ETFs
With its SEC filing on May 14, the State of Wisconsin Investment Board became the first public entity to disclose its cryptocurrency investments.
Its largest investment was $99.1 million iShares Bitcoin Trust, an exchange-traded fund managed by BlackRock, the world’s largest asset manager with more than $9.1 trillion in assets under management. An exchange-traded fund is a collection of stocks, bonds, or other investments that can be traded like stocks.
By the end of March the trust had happened nearly $17.8 billion in bitcoin and $140,552 in cash. The increase in bitcoin buying coincides with the SEC allowing the trading of cryptocurrency funds.
Blackrock launched iShares Bitcoin Trust in January after the SEC approved trading in bitcoin-based ETFs. The fund had almost $17.8 billion invested in bitcoin by the end of March. The fund closed at $38.98 on Tuesday, up about 46% from its January launch.
In a post on Twitter, Bloomberg senior ETF analyst Eric Balchunas said other public institutions will likely follow the board’s lead.
“Wow, a state pension bought $IBIT in the first quarter. Normally you don’t get these big fish institutions… for about a year (when the ETF gets more liquidity) but as we’ve seen these are no ordinary launches. Good sign, expect more, as institutions tend to move in packs,” she wrote.
When asked for comment on its cryptocurrency investment, the board said it “does not comment on specific investments.”
In addition to investing in bitcoin through BlackRock, the state’s cryptocurrency investments include:
- 63.6 million dollars Grayscale Bitcoin Confidence. Grayscale has assets of approximately $35 billion.
- $24.5 million in Coinbase, a cryptocurrency trading platform that allows users to buy and sell different cryptocurrencies.
SEC Chairman Gary Gensler said this in a January statement that allowing bitcoin-based ETFs should not be seen as an SEC endorsement of the cryptocurrency.
“Investors should remain cautious regarding the myriad risks associated with bitcoin and products whose value is tied to cryptocurrencies,” Gensler said.
Cryptocurrency trading has been compared to trading commodities such as oil or metals, but Gensler noted that these materials have industrial uses.
“While under contract, bitcoin is primarily a speculative and volatile asset that is also used for illicit activities including ransomware, money laundering, sanctions evasion and terrorist financing,” Gensler said.
Bukowski said getting the SEC involved is one way to protect investors.
“They need to have a placeholder to say, ‘We need to monitor him because we said it’s OK (to trade him),’” Bukowski said. “Now they can go to BlackRock, go to Grayscale and say, ‘Okay, how do you manage this? How do you buy it? How do you sell it?’… all those types of questions, now the SEC has the authority.”
Over the past five days, Bitcoin has traded between $66,685 and $70,314 per coin. It closed at $68,305 on Wednesday.