Fairfax County in Northern Virginia has already invested part of its pension funds in crypto and blockchain startups. Deeper involvement in decentralized finance (DeFi) yield farming is now being considered.
Fairfax County Police Pension System chief investment officer Katherine Molnar said Tuesday at the Milken Institute Global Conference that the system aims to fund two new crypto-focused hedge fund managers over the next three weeks. A decision will be made over the next few days that, if approved, would mark the first time pension fund funds would be used in DeFi.
According to Molnar, Fairfax has already committed pension funds to seven crypto allocations across two pension funds, including venture capital funds and a structure holding illiquid early-stage tokens and liquid later-stage tokens. Another approach to profiting from volatility is one of the seven categories. It includes a hedge fund that employs various techniques in cryptocurrency, including yield farming, basis trading, and cross-exchange arbitrage.
Fairfax County is no stranger to the blockchain and cryptocurrency space. In 2019, it started investing pension fund money in cryptocurrencies, with a projected return of 9%. Fairfax’s total crypto assets make up about 8% of its portfolio.
The executive issued a statement on the agency’s blockchain-related investments, noting that it had invested in the Morgan Creek Blockchain Opportunities Fund. The Employees’ Retirement System (ERS) pledged to invest $10 million, while the Police Officers Retirement System (PORS) pledged $11 million. Molnar likened yield farming to a fixed-income substitute, or an opportunity for a higher return than interest-rate sensitive investments.
Related: Australia’s retirement fund Rest Super wants to invest in crypto for its 1.8 million members
The United States ranked first in the 2021 Global DeFi Adoption Index. The index tracks the countries with the largest baseline adoption. On a larger scale, DeFi adoption is strong in high-income countries that already have significant cryptocurrency adoption, particularly among traders and institutional investors. Fairfax’s entry into the market only reinforces the case for DeFi adoption in the United States.
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