Contrasting Opinions on Cryptocurrency Investments
During a recent forum, candidates seeking election to the California Public Employees’ Retirement System (CalPERS) Board of Administration displayed contrasting opinions on the issue of cryptocurrency investments, particularly Bitcoin. Despite CalPERS already holding shares in MicroStrategy, a leading Bitcoin treasury firm, valued at approximately $165.9 million, the candidates voiced significant differences in their stances.
Debate Highlights
The event highlighted tension early on, especially when incumbent board member David Miller criticized challenger Dominick Bei by asserting,
“cryptocurrency should not have a seat on our board and never should.”
This remark came in response to Bei’s involvement with Proof of Workforce, an organization focused on Bitcoin education. In a rebuttal, Bei pointed out CalPERS’ significant stake in MicroStrategy, arguing that if the fund is indirectly involved in Bitcoin, a direct investment shouldn’t be dismissed.
MicroStrategy, led by Michael Saylor, reportedly holds over 636,505 Bitcoin, giving it a market value of more than $70 billion. This places the company as a popular option for institutions wanting some crypto exposure without needing to buy Bitcoin directly. Miller, however, maintained that engaging with businesses that deal in Bitcoin represents a different strategy compared to directly purchasing the cryptocurrency itself.
Varied Perspectives on Bitcoin
Adding to the discussion, Kadan Stadelmann, the Chief Technology Officer at Komodo Platform, expressed his belief that Bitcoin’s volatility is not a valid reason for pension funds to avoid it, especially amidst rising inflation. Stadelmann remarked that the market has begun to recognize Bitcoin as a reliable store of value, while also critiquing CalPERS for hesitating to invest directly in Bitcoin. He stated that the fund should prioritize direct ownership over relying on intermediaries.
Opinions varied even further with challenger Steve Mermell outright rejecting the idea of cryptocurrencies in CalPERS, likening it to previous financial failures such as the bankruptcies related to Orange County and Enron. He described the nature of crypto as
“opaque,”
underscoring his belief that it should be excluded from pension investments.
Challenger Troy Johnson took a more cautious approach, recognizing the risks associated with cryptocurrencies yet remaining open to future possibilities. He stated his wariness toward volatile investments but refused to shut the door entirely on them.
Blockchain Technology and Future Considerations
When it came to assessing blockchain technology, incumbent Jose Luis Pacheco distanced himself from Bitcoin investments, labeling it a poor choice while suggesting that CalPERS should explore blockchain due to its potential. He proposed that the fund embark on this inquiry through collaborations and research.
State Pension Funds and Cryptocurrency Exposure
Interestingly, while CalPERS contemplates its stance on cryptocurrencies, other state pension funds have been increasing their exposure to crypto. For instance, in the second quarter, Michigan’s state pension fund tripled its Bitcoin ETF holdings to $11.4 million, Wisconsin’s Investment Board accumulated over $387 million in Bitcoin ETF shares, and Florida’s retirement system owns 240,026 shares in MicroStrategy worth $97 million.
As CalPERS approaches the November elections, the outcomes may significantly influence whether the pension fund continues its current policy of indirect cryptocurrency engagement or considers a more direct approach to digital asset investments.
