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Virginia pension funds invest in crypto yield farming despite recent turmoil

Virginia’s Fairfax County Retirement Systems is set to invest its $6.8 billion pension fund in cryptocurrency yield farming to boost returns, the Financial Times reported on Aug 4.

The retirement systems fund recently gained approval from its board of trustees for the move, according to the news outlet.

Katherine Molnar, chief investment officer of the Fairfax County Police Officers Retirement System, told FT in an interview:

“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.”

Crypto yield farming refers to lending out digital assets for a stream of payments. But the Virginia county’s decision comes at a time when the crypto lending market has been marred by turmoil and a slew of company bankruptcies in the space.

Molnar reportedly said:

“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 Fairfax system recently invested $35 million each with Parataxis Capital’s digital yield fund and VanEck’s new finance income fund, according to the FT report. VanEck’s finance income fund aims to provide earnings to investors through short-term loan arrangements with digital asset firms.

But this is not the first time Fairfax country retirement systems invested in the crypto market. The $5 billion Fairfax County Employee Retirement System and the $1.8bn Fairfax County Police Officers Retirement System had invested $10 million and $11 million respectively in the Morgan Creek Blockchain Opportunities Fund in 2019, according to the FT report.

The pension managers claimed to have undertaken extensive due diligence before their first investment in the crypto space. The investments were mostly in the companies rather than the tokens, the FT reported.

The two pension funds then progressed to investments in private equity, hedge funds, and finally yield-farming projects. Andrew Spellar, investment chief for Fairfax County Employees said:

“We started in venture…

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