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- A pension system in Fairfax County, Virginia is reportedly considering allocating money to funds focused on crypto yield farming.
- In yield farming, cryptocurrencies are locked for a period of time or staked to earn interest or other rewards.
- The investments considered offer a return of at least 9%.
A pension scheme in Virginia’s most populous county could reportedly allocate some money to two crypto funds that use yield farming as an investment strategy, a move that could boost returns from its portfolio.
The Fairfax County Police Officer Pension Scheme, if approved, will seek to add money to the funds over the next three weeks, according to a Tuesday report by The Block, citing the system’s Chief Investment Officer Katherine Molnar. Molnar spoke at the Milken Institute of Global Conference in Los Angeles.
Similar to earning interest on funds deposited at a bank, yield farming involves locking or staking cryptocurrencies for a period of time in exchange for interest or other rewards, such as more cryptocurrencies. The process provides liquidity to decentralized exchanges.
The report said Molnar views yield farming as a replacement for fixed income investments or as a way to generate higher returns than interest-bearing assets.
“We’re using it as a high-yield replacement … the returns we expect are, say, closer to 9% to 11% in one case and probably a bit higher in the other, which is very attractive as a fixed-rate income replacement,” she was quoted as saying .
According to Bloomberg, in 2019 Fairfax County was one of the first counties in the US to allocate retirement money to crypto-related investments. Fairfax’s crypto-focused investments make up more than 8% of its portfolio, Molnar told Bloomberg, which first reported on its yield-farming strategy deliberations.
According to Bloomberg, Fairfax County Police Officers Retirement System and Fairfax County Employees’ Retirement System invested $50 million in Parataxis Capital Management LLC’s main fund in 2021, which buys various digital tokens and cryptocurrency derivatives.
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