• The Virginia Pension Fund invests $70 million in cryptocurrency lending

  • Fairfax County Retirement Systems is entering the “yield farming” business, despite recent developments in the crypto lending space.

    This year’s crypto loan crisis sent shockwaves through the industry. That hasn’t stopped Fairfax County Retirement Systems from digging deeper into the space. Fairfax County’s pension fund, worth $6.8 billion, has been given permission to invest $70 million in two crypto yield farming funds.

    The news comes just a month after two retirement systems, the Fairfax County Employees’ Retirement System and the Fairfax County Police Officers Retirement System, made a $35 million investment in Parataxis Capital’s digital yield fund and VanEck’s new financial income fund, respectively.

    Farming Market with High Yields

    The disastrous events of the last few months have reduced the value of crypto-assets by more than 50%. However, Katherine Molnar, chief investment officer of the Fairfax County Police Officers Retirement System, reported that the fund’s original market investments have increased by 350%. According to the executive, “things will bounce back, and stronger technology will probably survive.”

    Molnar was mentioned,

    “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. For those that are still willing to provide liquidity, decent profit seekers, they’re actually able to earn more attractive yields at the moment.”

    The administrative region’s foray into the digital asset field began three years ago, when the Virginia Police Department invested a portion of its pension fund in Bitcoin and blockchain technology. Its Director, Jeff Weiler, has been unfazed by the high market volatility and has instead stated that all investments come with certain dangers, while also stating that dealing with cryptocurrency could result in significant earnings.

    The Decline of Crypto Lending Platforms

    After the collapse of Terra ecosystem’s algorithmic stablecoin, UST, and its sibling token Luna, the crypto lending industry began to disintegrate (now Luna Classic). This episode ultimately exacerbated the advent of a “crypto winter,” resulting in an industry-wide sell-off followed by a series of withdrawals from platforms akin to a bank run.

    Three Arrows Capital, a multibillion-dollar hedge fund, was the first to fail, dragging down many investors with it. Soon after, Voyager Digital declared bankruptcy, preventing clients from recovering any investments they had made on the platform. Celsius is another another cryptocurrency lender that has declared bankruptcy.

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