TORONTO – Ontario Teachers’ Pension Plan (Teachers’) Canada bet on crypto exchange operator FTX Trading carries the lowest risk of any crypto asset class and its investment in the business has grown well in uncertain times, Teachers’ said last week.
Canada’s third-largest pension fund, OTPP, which oversees C$242 billion ($185 billion), invested in FTX Trading in 2021 in a $420 million funding round, alongside from Tiger Global, Sequoia and Light Speed Venture Partners.
“In terms of risk profile, this is probably the lowest risk profile you can have as everyone is trading on your platform,” OTPP CEO Jo Taylor told Reuters. last week.
He added that business is doing well and declined to comment on the size of OTPP’s investment or equity stake.
Founded in 2019 by 30-year-old billionaire Sam Bankman-Fried, FTX Trading was valued at $25 billion in the last funding round.
Taylor’s comments follow Caisse de depot et placement du Quebec announcing in August that it was writing off its entire $150 million investment in crypto lender Celsius Network after the company filed for bankruptcy this month. year.
Taylor said investing in FTX Trading is part of his strategy to learn more about the crypto industry and whether it offers the right balance of risk and return.
“I don’t think we have the answer to that question yet,” Taylor said.
Cryptocurrencies have been under pressure this year, with the price of flagship currency bitcoin crashing in half, dragging other digital currencies down.
Despite the decline, some large institutional investors continued to bet on this asset class. In August, BlackRock Inc announced a spot bitcoin trust that gives its US institutional investors access to trading in the digital currency.
Teachers’ bucked the downward trend in the stock market and high interest rates to post a return of 1.2% over the past six months as it reduced exposure to fixed income assets.
But Taylor said high inflation would make it difficult to achieve the 10% annual gains of the past five or six years over the next 24 months.
“That doesn’t mean we won’t strive for it,” Taylor said. “But the challenge is that there are only a few asset classes offering this similar rate of return.”
($1 = 1.2968 Canadian dollars)
(Reporting by Divya Rajagopal; Editing by Josie Kao)