South Korean State Pension Fund’s Stance on Crypto Investments
The National Pension Service (NPS) of South Korea has recently clarified its position regarding investments in cryptocurrency. Despite its recent activities involving crypto-related stocks, the fund has stated explicitly that it has no intentions to invest directly in cryptoassets at this time.
Recent Stock Purchases
According to a report from South Korean media outlet Money Today, the NPS explained that its recent acquisitions of shares in well-known companies like Coinbase and MicroStrategy were made automatically, relying on its investment management systems. It utilizes index management tools that track the Morgan Stanley Capital International Index (MSCI) and employs consignment management providers for individual corporate investments. Hence, the fund purchased shares of Coinbase and MicroStrategy when they were included in the relevant benchmark indices.
No Plans for Direct Crypto Investment
In a statement, the NPS categorically denied any plans to invest in cryptocurrencies, including Bitcoin (BTC). It reiterated, “We have no intention of investing in cryptoassets. […] Cryptoassets such as Bitcoin are not investment targets for us.” This statement came in response to inquiries from lawmaker Baek Jong-heon, who is part of the ruling People Power Party and is actively monitoring the NPS’s investment strategies.
Investment in Coinbase and MicroStrategy
Last year, the NPS acquired $20 million worth of Coinbase shares, and more recently, it invested approximately $33.75 million in MicroStrategy shares, which is renowned as the largest corporate holder of Bitcoin, led by CEO Michael Saylor, a prominent advocate for cryptocurrency.
Clarification on the Nature of Investments
The NPS clarified that while media outlets have described their investments in Coinbase and MicroStrategy as indirect investments in crypto, the fund emphasizes that these purchases were not made to gain exposure to cryptoassets. The agency noted that it had not taken any active measures to prevent the automatic purchase of these stocks.
Future Considerations and Caution from Lawmakers
Despite the absence of a direct investment in cryptocurrencies, the NPS did not fully rule out the potential for future investments in crypto-related firms. They indicated that if there were intentions to exclude certain companies from their investment portfolio, a formal restriction plan would need to be established by the Fund Management Committee. This implies that banking on the current approach could lead to further investments in the crypto sector.
Lawmaker Baek Jong-heon urged the NPS to closely examine its investment strategies concerning cryptocurrency, emphasizing the need to manage potential risks associated with the high volatility of the crypto market.
The Broader Context: Demand for Regulatory Changes
In South Korea, firms currently face restrictions on making direct investments in cryptoassets. This policy contrasts with practices seen in the United States and Japan, where many companies are actively purchasing Bitcoin, Ethereum (ETH), and other cryptocurrencies. Consequently, there is growing pressure within South Korea to reevaluate and potentially lift these restrictions.
A South Korean IT entrepreneur expressed frustration over the regulations: “My company – and any other for that matter – should be free to invest our money in whatever assets we choose to. If this is the case in the United States, why aren’t our political leaders taking note?” This sentiment reflects a broader desire among South Korean businesses for more freedom to engage with the evolving cryptocurrency landscape.