Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
Login Archives Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • AI Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    • Postcards
    ×
  • Subscribe
Enter stock ticker or keyword
×
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: Bitcoin
Stocks: BK, JPM, STT

Just One Thing Stands Between Bitcoin and a Pool of $41.4 Trillion

By David Zeiler, Associate Editor, Money Morning • @DavidGZeiler • July 30, 2018

View Comments

Start the conversation

Leave a Reply Click here to cancel reply.

You must be logged in to post a comment.

For the past couple of years, cryptocurrency advocates have anticipated a major catalyst that would surely drive prices higher - the moment when large institutional investors start investing in Bitcoin.

Editor's Pick: 5 Energy Stocks That Pay You to Invest in Crypto Mining

digital currency prices todayWe've seen some hedge funds dabbling in cryptocurrencies already, but one of the largest pools of institutional money in the world - pension funds -- has stayed almost completely on the sidelines.

And pensions in the world's 22 top pension markets make up a massive, price-moving pool of $41.4 trillion, according to Willis Towers Watson.

Should even a small portion of this money trickle into primary cryptocurrencies like Bitcoin, it could cause the prices of those cryptos to double or even triple.

While this traditionally conservative corner of investing isn't likely to jump into the crypto universe with both feet, the sector's unusually high returns have started to catch the attention of pension fund managers.

"We're looking into it," TerriJo Saarela, director of corporate governance for the State of Wisconsin Investment Board, admitted to Forbes in March.

One major obstacle is holding them back...

What Pension Fund Managers Are Waiting For

When you manage a fund worth billions of dollars, security is a major concern. So imagine being a pension fund manager who's considering investing in Bitcoin reading news story after news story about how yet another crypto exchange was hacked and millions of dollars' worth of crypto stolen.

You wouldn't feel too confident about exposing your pension fund to that kind of risk.

But in the world of institutional investing, there is an answer to this - professional custodians.

Custodians offer protection for investments that require some level of security, such as physical gold. And Wall Street has no shortage of them. Some of the major names include State Street Corp. (NYSE: STT), Bank of New York Mellon Corp. (NYSE: BK), and JPMorgan Chase & Co. (NYSE: JPM).

See Why Bitcoin Is Far from Dead: Cryptocurrency legend Michael Robinson just revealed why Bitcoin could be poised for a record-breaking rebound. Before the mainstream public gets any wiser, you need to see this now.

But none of these most trusted custodians have moved into cryptocurrencies yet. And especially with an investment as tricky to properly secure as crypto, institutional investors like pension funds won't settle for anything less than a top-notch custodian.

A few crypto companies, most notably Coinbase and the Winklevoss twins' Gemini Trust Co., do offer custodial services for institutional investors. But for pension fund managers, the trust factor isn't there yet.

Part of that is due to the lack of a track record.

Gemini's service launched in 2016; the Coinbase service is brand-new, having launched July 2.

Pension fund managers are also wary of cryptocurrency as an asset. The volatility, in addition to the frequent stories of crypto exchanges getting hacked, has made fund managers especially cautious about investing in cryptocurrencies.

But the lack of custodial services is by far the biggest roadblock right now...

Custodians Hold the Key

"So much of the security of Bitcoin and other cryptocurrencies rests with who stores that private key, who controls the vault," Blake Estes, counsel, financial services, and co-leader of blockchain and distributed-ledger technology at Alston & Bird LLP told Pension & Investments.

"Blockchain (the technology behind the transfer of assets) itself can't be hacked, but it all still boils down to who ends up holding the keys," Estes continued. "I'd tend to think that pension funds will not venture into uncharted territory until they're certain about the security of who has custody of the keys."

It's unclear exactly what the big-name custodians are doing with regard to cryptocurrency - they haven't disclosed their plans.

But Jonathan Benassaya, founder and CEO of IronChain Capital, suggested to Pensions & Investments that major custodians aren't ignoring crypto.

"The level of custody in crypto is the same as with other assets, except that crypto is self-cleared through the blockchain," Benassaya said. "Custodians are not so far away from making this happen."

And they certainly have the incentive. The market cap of all cryptocurrencies right now is more than $300 billion, even with prices down more than 50% from their December highs. Significant interest from institutional investors would represent substantial new business for them.

"If custodians expand their business model to take care of cryptocurrencies, the same as with classic securities, there could be quite some space in terms of revenue growth. They can bring the experience and reliability of classic custodian work to this asset class," Matthias Voelkel wrote in a March report from McKinsey & Co.

Of course, the major custodians also want to be sure they will have customers when they do decide to launch crypto custodial services.

That means more pension funds and institutional investors will need to express a desire to invest in crypto.

The thing is, the pension funds have a strong incentive of their own to take the leap into Bitcoin and other cryptocurrencies...

What Will Drive Pension Funds to Start Investing in Bitcoin

Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter

Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…

Claim My Free Report

David ZeilerDavid Zeiler

About the Author

Browse David's articles |

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

… Read full bio

Subscribe
Login
Notify of
guest

guest

3 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Robert Pigott
Robert Pigott
5 years ago

I invested $100 in Bitcoin when it was selling for $200. Huge return for a relatively small amount.

0
Reply
Robert Pigott
Robert Pigott
5 years ago

I purchased one-half a Bitcoin when it was selling for $200.

0
Reply
latest news
latest news
5 years ago

Good info. Lucky me I ran across your site by chance (stumbleupon).
I've book marked it for later!

0
Reply


Latest News

September 21, 2023 • By Shah Gilani

earnings
The Best Auto Stocks to Buy (or Avoid) Right Now

September 21, 2023 • By Garrett Baldwin

Postcards: Tell Your Wife These Three Little Words

September 20, 2023 • By Garrett Baldwin

Postcards: Captured by Vines... and Regulation
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Penny Hawk Midday Momentum
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Quantum Data Profits Flashpoint Trader Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance L.A.U.N.C.H. Investor Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz