The Jersey City pension fund’s path to BTC exposure

Jersey City’s pension fund plans to buy bitcoin ETFs in the coming weeks after starting the process to allocate to such products earlier this year.

The upcoming purchase comes after Donald Trump’s election win, which industry watchers have said is likely to spur another wave of institutional crypto adoption.

“Would we have liked to get involved at $60,000 as opposed to $90,000?” Jersey City Mayor Steven Fulop said Tuesday. “The answer’s obviously yes. But I think if you look in a year or two years from now, it’ll still be much higher than it is today.”

Fulop, a Democrat, said in July that Jersey City’s pension fund was planning on getting exposure to BTC funds.

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Jersey City Business Administrator John Metro said he and Fulop started talking about this around the time Wisconsin’s investment board revealed a roughly $100 million allocation in bitcoin ETFs. That was back in May.

Metro then presented the idea to the pension fund’s board, composed of five commissioners. The board had questions — such as the time horizon it might hold the BTC products — but did not show opposition, the Jersey City officials noted.

Because of the limited track record for the US spot bitcoin ETFs (they launched in January) compared to other assets with year-over-year track records, the board had to update some of its investment rules.

That was done about a month ago, Metro said. And standard protocol, he added, is for the pension fund to abstain from making any significant changes in the month of an election, due to volatility.

“Now that the asset is identified as part of our investment strategy, we’ll actually go to the physical market in the next three weeks,” Metro told Blockworks Tuesday. He noted the post-election time was not intended, but rather how the timeline played out given the various steps needed before allocating.

The pension fund — with about $225 million — is looking at the BTC products offered by BlackRock and Fidelity, given their high volumes. It could look to establish a 2% or so position in bitcoin ETFs as a start, the officials said — trimming allocations in other assets to make room.

Fulop and Metro didn’t detail which assets it would reduce exposure to. However, the mayor did note the similarity between gold and bitcoin when it comes to serving as a “store of value.”

“And if you think about the utility relative to gold, in many ways bitcoin is more advantageous in the sense that you can move bitcoin around instantaneously,” Fulop added.

Keep reading for more excerpts from my interview with Fulop.

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Blockworks: When did you first get interested in crypto?

Fulop: I have been a believer in the importance of crypto and blockchain — both separately — since 2018, 2019. I’ve been a personal investor for some time in different cryptocurrencies.

I believe in the technology, I think it’s important and I think at this point it’s inevitable. The conversation about whether it’s going to exist long term, or not exist, has been put to bed. I think we all recognize it’s here to stay long term and it’s an asset class in and of its own.

Blockworks: What do you make of Donald Trump’s crypto stance?

Fulop: His policies and his comments certainly reflect the fact that he’s a supporter. Now, who knows in actuality how he feels about it. But I do think that he’s politically smart in the fact there are tens of millions of crypto wallets out there among Americans — particularly younger Americans.

So capturing that audience, he was very smart to do, and the reality is the people who have those crypto wallets are not only skewing younger but they’re people who certainly believe in the technology, have concerns about fiat money and are looking to be engaged in the political system in a way to make sure that this remains a viable asset class.

Do I think he’s going to follow through in promoting or appointing an SEC chairman and individuals that are crypto friendly? Yes. So I think you’re still in the early phases of all this stuff.

Blockworks: Might Jersey City’s pension fund look to allocate to ether ETFs next?

Fulop: The pension fund has only looked at bitcoin at this point. I think that we’re in the early phases of getting people comfortable with a pension fund allocating any resources toward crypto.

I personally think Ethereum is here to stay and I would feel comfortable, but it’s not all my money in the pension funds. And I think pension fund fiduciaries and the board recognize they need to be cautious with that.

Blockworks: Are you considering any other crypto-related policies or initiatives?

Fulop: We haven’t started thinking about accepting crypto or bitcoin as an official payment for anything with regards to City Hall’s day-to-day operations.

And one of the reasons for that is I think there’s a little bit of time before there’s more stability in the price. You’ve seen even over the last week the huge run from $68,000 to $90,000 per coin — and, like I said, I think you’re in the early phases of that.

Is that related to Trump? Is that post-halving? What does it look like in 10 years? There’s a lot of questions that create fluctuation. It’s clearly a volatile space; I think that’s fair to say. And, generally speaking, when city governments get involved in accepting a payment for something, you’re not looking for extreme volatility because we have to run an operation here day to day.

This interview was edited for clarity and brevity.

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