American foundations and university endowments are reportedly increasing their cryptocurrency investments amid a market boom.
As the Financial Times (FT) reported Sunday (Feb. 9), many institutions that had long avoided investing in crypto are now joining in out of concern they’ll miss out on price surges.
For example, the University of Austin is raising a $5 million bitcoin fund, which the FT calls the first of its kind among the country’s endowments and foundations, for its $200 million endowment. And Georgia’s Emory University last year became the first college endowment to disclose holdings of bitcoin exchange traded funds (ETFs).
Meanwhile, the $4.8 billion Rockefeller Foundation is considering increasing exposure to cryptocurrencies if its user base becomes more diversified, the foundation’s chief investment officer told the FT.
“We don’t have a crystal ball on how cryptocurrencies will become in 10 years,” said Chun Lai, “We don’t want to be left behind when their potential materializes dramatically.”
According to the report, crypto venture funds say they’re witnessing an influx of capital from endowments and foundations that until a few years ago were on the sidelines. For example, California’s Pantera Capital has seen an eight-fold increase in the number of endowment and foundation clients since 2018.
As the report noted, America’s top foundations and endowments were among the first institutional investors to embrace crypto. Yale University’s endowment invested in two crypto venture funds in 2018 when the price of bitcoin was a fraction of today’s numbers.
The news comes at a time when, as PYMNTS wrote last week, “companies are starting to view bitcoin not just as an investment, but as a leveraged financial asset that can be used strategically.”
For example, Strategy — formerly MicroStrategy — has issued convertible debt and equity raises to fund its bitcoin purchases, basically using its bitcoin holdings as collateral for capital market activities. This model, PYMNTS wrote, could foster new approaches to corporate financing and capital allocation, especially for companies looking for alternative treasury strategies in an era of rising interest rates.
“Many treasurers are thinking, ‘Well, how can I extract that last ounce of juice from my financial ecosystem?’” Ambrish Bansal, global head of liquidity and cash concentration products for the Citi Treasury and Trade Solutions business, said in an interview with PYMNTS.
Regulatory uncertainty has been a chief concern for businesses considering bitcoin adoption. But now, clearer accounting rules and the Trump administration’s push for regulatory frameworks for cryptocurrency regulation are offering CFOs more confidence in dealing with bitcoin’s financial reporting and compliance risks.
