In a groundbreaking move, South Korea’s National Pension Service (NPS), the world’s third-largest pension fund, has entered the cryptocurrency arena with a significant investment in Coinbase shares. Here are the details…
Large cryptocurrency investment from South Korean fund
NPS allocated $19.9 million to purchase 282,673 shares of Coinbase Global in the third quarter of this year, according to the latest holding report filed with the U.S. Securities and Exchange Commission. This marks the first time NPS, which had $755 billion in total assets as of June, has included a cryptocurrency-related security in its investment portfolio. Despite having a policy against direct investment in crypto assets, the pension fund has signaled potential interest in crypto exchanges in 2021.
Coinbase, a leading cryptocurrency exchange, witnessed a surge in its stock value on Wednesday, closing 6.58% higher at $98.15 on Nasdaq. This increase contributed to a significant growth of 192.1% since the beginning of the year, defying previous expectations. The decision to invest in Coinbase proved lucrative for NPS, as the stock’s growth contributed to a 40% profit for the pension fund in the third quarter. 282,673 shares were purchased at an average price of $70.5, corresponding to an investment of approximately 26 billion Korean won, with a current value of approximately $27.74 million.
The fund also received criticism
Despite impressive earnings, NPS has faced criticism from South Korea’s National Assembly for engaging in crypto-assets-related businesses. Critics argue that crypto assets lack natural cash generation. They also argue that it relies on selling to the next investor for return. That is, skepticism surrounds investments in cryptocurrencies. Coinbase’s strong performance in the third quarter, reporting revenue of $674.1 million (up 14.2% year-over-year) and a net loss of $2 million, also supported the positive sentiment.
The prospect of US approval for spot Bitcoin exchange-traded funds has also increased investor interest. It contributed to the recent rise in Bitcoin prices. Bitcoin, the largest cryptocurrency by market cap, is up 5.2 percent over the past 24 hours to $37,446, seeing a significant year-to-date increase of 126.3%. This bullish trend in the cryptocurrency market will likely further impact the growth of crypto-related stocks. Thus, it will be able to attract more institutional investors to the crypto asset space.
