Virginia Pension Fund Enters Crypto Lending Space to Enhance Returns

Fairfax County Retirements Systems, a $6.8 billion Virginia pension fund, seeks to expand its scope by entering the crypto lending market to boost its returns, according to Financial Times. 

This quest became a reality after the board of trustees gave the pension fund the greenlight to start investments in yield farming, whereby investors lend out their digital assets to crypto projects. In return, they attain a fixed stream of income. 

Katherine Molnar, the chief investment officer of the Fairfax County Police Officers Retirement System, pointed out:

“Some of the yields that you’re able to achieve in a yield farming strategy are really attractive because some of the people have stepped back from that space.”

It seems the Fairfax County Retirements Systems intends to fill the void left by various leading crypto lenders, with some filing for bankruptcy and others facing an uncertain future. 

For instance, cryptocurrency hedge fund Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy last month. The hedge fund’s woes were ignited by the collapse of LUNA-UST, given that it had a significant amount of exposure, Blockchain.News reported. Other embattled crypto lenders include Voyager and Celsius Network. 

Fairfax County Retirements Systems is committed to entering this sector because it has already placed $35 million each at VanEck’s new finance income fund and Parataxis Capital’s digital yield fund. This move will be instrumental in providing investors with income through short-term lending arrangements with crypto assets.

Andrew Spellar, investment chief for Fairfax County Employees, noted:

“We started in venture capital and private equity. But once we got more comfortable in the space, we started to think a bit broader about how we might be able to use strategies in digital assets in other parts of the portfolio.”

Meanwhile, different crypto sectors continue attracting more players. For instance, Philcoin, a philanthropic blockchain movement, recently launched a staking mechanism enabling users to donate part of their earnings to charity. 

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Virginia Senate Votes to Support New Bill by Permitting Banks to Offer Crypto Custody Services

With just a signature away, banks operating in the United States of Virginia will soon be able to offer cryptocurrency custody services.


Based on the unanimous vote from the Virginia Senate, the proposed bill amendment introduced on January 22 this year by Delegate Christopher T. Head sought to allow eligible banks to offer cryptocurrency custody services.

The House Bill No. 263 reads:

“A bank may provide its customers with virtual currency custody services so long as the bank has 26 adequate protocols in place to effectively manage risks and comply with applicable laws.”

In tandem with a growing trend amongst key states in America to integrate digital assets into their economic operations, the Virginia lawmakers passed the proposed amendment 39:0. Following the passage of the Bill, Virginia Governor Glenn Youngkin is expected to sign to bill to make it a law in the United States.

Should the bill be signed into law, banks willing to offer crypto custody services will have to fulfil three basic requirements: the implementation of effective risk management systems, the possession of adequate insurance coverage, and the launch of an oversight program to address associated risks with cryptocurrencies.

Additionally, bank customers will be required to have full control of the private and public keys linked to their digital assets under custody.

“Acting in a fiduciary capacity, the bank shall require customers to transfer their virtual currencies to the control of the bank by creating new private keys to be held by the bank.”

Different states in the U.S. are integrating cryptocurrencies in different ways. Colorado is ramping up plans to start accepting Bitcoin and other altcoins as payment for tax and fees in the state as early as this summer. With more states beginning to realize the inherent value in digital currencies, it will not be surprising to see more states or cities announce their own unique ways of embracing these nascent asset classes.

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