Universities and Foundations Jump into Cryptocurrency Investments

US foundations and university endowments are increasing their investments in cryptocurrencies, spurred by President Trump’s push to make the country the “bitcoin superpower.”

Major US foundations and university endowments are ramping up their cryptocurrency investments as President Trump pushes to make the country the “bitcoin superpower.”

The University of Austin is spearheading the initiative by launching a $5 million bitcoin fund for its $200 million endowment, marking the first time a university endowment has ventured into cryptocurrency with such a fund.

Meanwhile, Emory University in Georgia disclosed its holdings of bitcoin exchange-traded funds (ETFs) last October, becoming the first college to do so.

The Rockefeller Foundation, which boasts a $4.8 billion endowment, is also considering increasing its crypto exposure, particularly if the industry manages to attract a more diverse user base.

Cryptocurrency venture funds, such as Pantera Capital, have also seen a surge in capital, with an eight-fold increase in endowment and foundation clients since 2018.

Yale University and the University of Texas/Texas A&M Investment Management Company were among the early adopters of cryptocurrency investments, making small investments in crypto venture funds during the early 2020s.

However, some experts are raising concerns over the speculative nature and volatility of these assets.

Eswar Prasad, a professor at Cornell University, warned that institutional investors might be getting into speculative assets that are highly volatile and offer little hedging against other risky assets.

notably, cryptocurrencies have outperformed traditional assets in the past five years, with an index of the 10 most valuable cryptocurrencies gaining 64% annually, compared to 14.5% for US equities.

Despite the challenges faced by cryptocurrencies, such as low adoption rates and regulatory uncertainty, some endowments are convinced of their long-term potential.

The University of Austin’s endowment plans to hold its crypto portfolio for at least five years.

Chun Lai, the Rockefeller Foundation’s CIO, also sees digital assets as valuable in the future, especially as the economy becomes more digitalized and integrated with artificial intelligence.

While some foundations are cautious and expanding their crypto portfolios slowly, others, such as the University of Nebraska Foundation, are waiting for clearer regulations and more widespread adoption before making any moves.