Exclusive: Canada’s Largest Pension Plan, CPPI, Ends Pursuit of Crypto Investments

© Reuters. FILE PHOTO: A bitcoin avatar is seen in front of a stock chart in this illustration taken May 19, 2021. REUTERS/Dado Ruvic/File Photo

By Divya Rajagopal

TORONTO (Reuters) – Canada’s largest pension fund, CPP Investments, has halted efforts to research investment opportunities in the volatile crypto market, two people familiar with the matter told Reuters.

The reason behind CPPI’s abandonment of crypto research was not immediately clear. CPPI declined to comment but said it does not invest in cryptocurrencies directly. It refers to previous comments about the cryptocurrency by its CEO, John Graham, in which he sounded cautious.

The people added that CPPI’s Alpha Generation Lab, which examines emerging investment trends, set up a three-member team in early 2021 to research cryptocurrencies and other investments. businesses related to blockchain, in order to reach the potential.

But CPPI abandoned the pursuit this year and redeployed the group to other regions, the sources said.

CPPI’s move also comes as two of Canada’s largest pension funds have cleared their investments following the collapse of crypto exchange FTX and crypto lender Celsius in the wake of the collapse. this year.

Earlier this year, CPPI CEO Graham said a pension plan that manages C$529 billion (US$388 billion) for nearly 20 million Canadians, is reluctant to invest in crypto simply out of fear of giving up. Miss.

“You want to really think about the underlying intrinsic value of some of these assets and build your portfolio accordingly,” Graham said in a June statement. “So I’d say crypto is something that we keep looking at and trying to understand, but we haven’t really invested in it yet.”

It is unclear when CPPI dropped the plan. One of the sources said the team was actively evaluating investment opportunities by the end of July this year, but a second source said the team had finished work earlier than that.

The details of CPPI’s pursuit of crypto investment and its decision to terminate it have not been previously reported.

The sources of disclaimer were identified because the information was not made public.

The exposure of Canadian pension funds to the crypto sector has come under scrutiny in the wake of the FTX crash. While Canadian pension funds are not banned from buying cryptocurrencies, they are known for their risk-averse investment strategies to generate steady returns for retirees.

Although CPPI has avoided investing in cryptocurrencies, a number of its peers have been caught up in the mayhem of the sector this year. The Ontario Teachers’ Pension Fund (OTPP), which oversees about C$242 billion in assets, has written off C$95 million worth of investments in FTX. The OTPP said it was “disappointed” with the investment in FTX.

Earlier this year, Canada’s second-largest pension fund, Caisse de Đépôt et place du Québec (CDPQ), said it had written off a C$150 million investment in a bankrupt crypto lender. Celsius. CDPQ initiated legal proceedings against C in bankruptcy court.

The Ontario Municipal Employees Retirement System (OMERS), which manages C$121 billion, made three allocations to crypto-linked businesses through its OMERS Ventures business between 2012 and 2018 but withdrew all investments in 2020.

Another Canadian pension fund, OP Trust, told Reuters it has investments in the externally managed digital asset fund space. The investment is in the underlying cryptocurrency technology, it said.

($1 = 1.3650 Canadian dollars)

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