By Divya Rajagopal
TORONTO (Reuters) – Canada’s largest pension fund, CPP Investments, has ended efforts to research investment opportunities in the volatile cryptocurrency market, two sources familiar with the matter told Reuters .
The reasons why CPPI dropped cryptocurrency research are unclear. CPPI declined to comment but said it has no direct investments in cryptocurrencies. It referred to previous comments on cryptocurrencies by its chief executive, John Graham, in which he sounded a warning.
CPPI’s Alpha Generation Lab, which researches emerging investment trends, has assembled a three-person team earlier 2020 to study cryptocurrencies and regional Blockchain-related businesses in order to obtain potential risks.
But CPPI dropped the pursuit this year and redeployed teams to other regions, the sources said.
CPPI’s move also comes after the collapse of cryptocurrency exchange FTX and cryptocurrency lender Celsius this year, with two of Canada’s largest pension funds writing off their investments.
Earlier this year CPPI CEO Graham said the pension plan manages 529 billion Canadian dollars (388 Billions) Nearly 20 Millions of Canadians Don’t Want to Invest in Cryptocurrency Just for Fear of Missing Out .
“You want to really think about what the underlying intrinsic value of some of these assets is and build your portfolio accordingly,” Graham said in a speech in June. “So I would say crypto is something we continue to look at and try to understand, but we haven’t really invested in it yet.”
It’s unclear when CPPI dropped its plans. The team did not actively evaluate investment opportunities until July of this year, one of the sources said, but a second source said the team had wrapped up work earlier than that.
Details of CPPI’s pursuit of cryptocurrency investments and its decision to end it have not been previously reported.
The sources declined to be identified as the information is not public.
Canadian pension fund exposure to crypto comes under scrutiny after FTX crash. While Canadian pension funds are not banned from buying cryptocurrencies, they are known for their risk-averse investment strategies that deliver stable returns to pensioners.
While CPPI has avoided crypto investments, some of its peers have been caught up in the industry’s turmoil this year. The Ontario Teachers’ Pension Plan (OTPP), which manages about $1 billion in assets, has written off $1 billion worth of investments. Millions of FTX. OTPP said it was “disappointed” with its investment in FTX. Investing C$121 million Canadian dollars in bankrupt crypto lending company Celsius. CDPQ has filed legal action against Celsius in bankruptcy court.
The Ontario Municipal Employees Retirement System (OMERS), which manages Canadian dollars 121 billion, through its OMERS Ventures business in 529 and 529 made three assignments to crypto-related business, but withdrew from the pair to 2018.
OP Trust, another Canadian pension fund, told Reuters it has investments in the digital asset fund space, managed externally. The investment, it said, is in the underlying encryption technology.
($1=1.3650 Canadian dollars)
