The National Pension Service (NPS) of South Korea, which is one of the world’s largest pension funds, made a significant investment in the global cryptocurrency exchange Coinbase during the third quarter of this year. According to a stock holdings report filed with the United States Securities and Exchange Commission (SEC) on Nov. 15, the NPS acquired 282,673 shares of Coinbase (COIN) during this period. Based on the last recorded close price of Coinbase at $98.15 on Nov. 15, the investment is currently worth $27.7 million. The NPS reportedly acquired the shares for about $19.9 million, indicating a profit of $7 million, or 39%.
This move represents the first time that South Korea’s public pension fund has invested in COIN stock, as the NPS has historically avoided direct investments in cryptocurrencies like Bitcoin (BTC) due to concerns about volatility. In fact, the NPS faced criticism from the National Assembly in 2021 for its involvement in a crypto-related business, prompting the pension fund to clarify that it had only invested in the exchange itself, rather than in cryptocurrencies directly.
Coinbase’s stock has experienced substantial growth in 2023, with shares reaching as high as $110 in July. Year-to-date, COIN shares have increased in value by close to 170%, starting the year at around $37, according to data from TradingView. However, despite this impressive growth, the stock is still 74% down from its all-time highs above $300 in September 2021.
It is important to note that Coinbase has been facing legal challenges, including a lawsuit from the U.S. SEC filed in June 2023. The lawsuit alleges that Coinbase violated U.S. securities laws by offering unregistered securities or certain cryptocurrencies for investment on its platform. In October, Coinbase contested the SEC’s authority in the crypto space, arguing that the regulator’s definition of security was too broad.
The NPS’s investment in Coinbase underscores the growing interest of institutional investors in the cryptocurrency and digital asset space. As more traditional financial institutions recognize the potential of digital assets, it is likely that we will see further investment from pension funds, hedge funds, and other institutional players in the cryptocurrency market.
In conclusion, the NPS’s acquisition of a substantial number of Coinbase shares demonstrates the increasing convergence of traditional finance and crypto markets. As regulatory uncertainty in the crypto space continues to diminish and institutional interest grows, we can expect to see more pension funds and other institutional investors participating in the digital asset ecosystem. This trend could have significant implications for the broader financial industry and the mainstream adoption of cryptocurrencies and blockchain technology.