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Fidelity Says Pension Funds Eyeing Crypto Following Bitcoin ETF Success

Fidelity is in talks with institutional investors to bring traditionally conservative pension funds into crypto

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Pension funds are exploring investment opportunities in Bitcoin according to Fidelity.

The asset manager, which has $4.9 trillion in AUM, said the funds are particularly drawn to the asset class following the approval of Bitcoin ETFs earlier this year.

Fidelity launched its digital assets branch in 2018 and is among the eleven asset managers whose US Bitcoin ETFs were approved by the SEC. FBTC – Fidelity's Bitcoin ETF – is the third largest in its class, with AUM of $9.9 billion.

Now, Manuel Nordeste, Fidelity's VP of digital assets, has said the firm is actively discussing Bitcoin allocations with major pension funds.

"Now, we’re starting to have conversations with the larger, real money institutional investor types, and we’re getting some of those clients, as well as corporates and so on," Nordeste said.

US pension funds hold more than $4 trillion in capital. Even a small allocation to Bitcoin would drive inflows significantly.

Pension funds have traditionally held a more conservative and risk-averse approach so their interest in cryptocurrency has been limited. Bitcoin ETFs are now proving to be stable enough for these funds and potentially even wider mainstream adoption.

Fidelity's comments follow rival BlackRock's insights last week, which echoed a similar message.

Robert Mitchnick, head of digital assets for BlackRock, said financial institutions including sovereign wealth funds, pension funds and endowments could start trading these ETFs.

“Many of these interested firms – whether we're talking about pensions, endowments, sovereign wealth funds, insurers, other asset managers, family offices – are having ongoing diligence and research conversations, and we're playing a role from an education perspective,” Mitchnick said.

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He added that BlackRock has been discussing Bitcoin for these institutions for years. “When we think about this space, we see the potential for digital assets to benefit our clients and capital markets, with a focus in three areas: cryptoassets, stablecoins and tokenization,” Mitchnick said.