From waiting to accept, endowments from universities in the United States embrace cryptocurrencies

Comprehensive editor: Felix, PANews

With the rise of the cryptocurrency boom in recent years, some investors have seen the potential to increase to digital portfolios. Endowments and foundations, which were still on the stand-by and watch a few years ago, have become increasingly open to investment, becoming one of the first institutional investors to accept cryptocurrencies.

Pantera Capital, a venture capital fund focusing on digital assets in California, USA, reported that the number of endowment and foundation clients has increased by 8 times since 2018.

The endowment fund aims to fund nonprofits such as hospitals, churches or universities. University endowments are pools of funds accumulated by academic institutions and usually exist in the form of charitable contributions. These funds are used to support teaching and research and can be allocated to a variety of assets for investment purposes.

Recently, the University of Austin, which was established for one year, is raising $5 million in Bitcoin funds for its $200 million endowment. This is the first such fund among U.S. endowments and foundations.

The University of Austin aims to develop a 5-year Bitcoin holding strategy. "We think Bitcoin has long-term value, just as we think stocks or real estate has long-term value," said Chad Thevenot, vice president of the University of Austin.

In October last year, Emory University in Georgia became the first university endowment fund to disclose its holdings of Bitcoin ETFs. According to filings with the U.S. SEC, the university holds nearly 2.7 million shares of Grayscale Bitcoin Mini Trust, worth over $15 million, and also holds 4,312 shares of Coinbase.

In 2018, Yale University’s endowment invested in two cryptocurrency venture capital funds, when Bitcoin price was less than one-tenth of today. One is managed by Andreessen Horowitz (a16z) and the other is Paradigm founded by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang.

In addition, some of the largest university endowments in the United States seem to have been quietly buying cryptocurrencies through accounts on Coinbase and other exchanges, according to sources. Including Harvard, Yale, Brown, Michigan and several other universities.

Britt Harris, former chief investment officer at the University of Texas/Texas A&M Investment Management ($78 billion in assets) said under his leadership, the largest university endowment in the U.S. in early 2020s, The fund made a "small experimental" investment, believing it as a "potentially attractive future strategy."

Additionally, Lai of the Rockefeller Foundation said that if the cryptocurrency user base is “expanded and deepened”, it will consider increasing investment in cryptocurrencies.

In addition to university endowments, cryptocurrencies are becoming increasingly popular among pension funds, indicating a shift in the concepts of the younger generation.

Pension funds such as Wisconsin have previously reported holdings of Bitcoin ETFs. Additionally, the Jersey City Municipal Pension Program, New Jersey, announced that it will allocate 2% of its assets to the ETF.

According to a Bitget Research report, up to 20% of Gen Z and Alpha are willing to receive pensions in cryptocurrency. 78% of respondents said they trust “alternative retirement saving options” more than traditional pension funds, highlighting a significant shift to “decentralized finance and blockchain-based solutions.”

It is worth mentioning that "following the trend" investment has also aroused the vigilance of some people.

"I'm very worried that institutional investors will enter financial assets that are inherently purely speculative, and that such assets cannot provide much hedging compared to other risky assets," said Eswar Prasad, a professor at Cornell University. “Bitcoin seems to be rising and falling with the prices of other risky assets such as stocks, but it is much more volatile.”

Brian Neale of the University of Nebraska Foundation believes that because of the low adoption of cryptocurrencies among configurators, he does not consider cryptocurrencies to be an “institutional investable” asset class. It does not intend to enter the field at this moment until more peers join and supervision is clearer. He also called for increased regulatory transparency, such as the US SEC guidance on cryptocurrency investment to regulate the industry.

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