Virginia Fairfax County puts in $70 million in crypto loans as investment
The crypto winter brought several devastating impacts to some crypto lending platforms. There was a lot of struggle from most lending companies to avoid liquidation. Their turbulent waves created distrust, loss of hope and funds for many investors.
In the history of the crypto lending space, instability and tremors are linked to the collapse of the Terra ecosystem’s algorithmic stablecoin. This was closely followed by the fall of the LUNA token, which has recently morphed into Luna Classic.
The unfolding of the event catalyzed the emergence of the crypto winter which led to a massive loss of funds. This situation spread like wildfire to the entire crypto space. As a result, almost all cryptocurrencies lost large percentages of their values from the beginning of 2022.
Some lending platforms that offered high interest rates took the worst hit. Three Arrows Capital (3AC) first had a fall, creating a risk of contagion for others. Voyager Digital followed later when it declared insolvent, with Celsius Networks following closely behind.
All the chaos with the cryptocurrency lending sector isn’t putting a stop to Fairfax County Retirement Systems’ plan. The Fairfax County pension fund received approval to invest in yield farming. The permit will see the pension fund invest $70 million in two different crypto lending platforms.
Recent firms to enter the crypto lending landscape
A month ago, two pension systems announced their investment of $35 million in the digital return fund of Parataxis Capital and VanEck’s new financial income fund. The retirement systems are the Fairfax County Police Officers Retirement System and the Fairfax County Employee’s Retirement System.
Fairfax County Police Officers Retirement System Chief Investment Officer Katherine Molnar commented on the recent move. Molnar stated that the fund had received around 350% in its original market investments. The manager believed it would be a positive change, and the technologies with robust strength and innovation would strive.
In interaction with FT, Molnar further mentioned that some of the yields that can be achieved through a yield farming strategy are impressive. The reason is linked to older participants withdrawing from the place.
Officer Molnar explained that there are currently attractive yields. But these are only available to decent profit seekers who are willing to provide liquidity with their funds.
The history of investments within the digital asset space for the administrative region goes back to the last three years. Police in Virginia had also invested part of their pension fund in Bitcoin and blockchain technology. This recorded the first plunge in virtual currency investment.
Director Jeff Weiler had remained unmoved by the volatile nature of the virtual assets. He maintained that every investment has its related risks. However, he mentioned that getting involved in cryptocurrencies brings massive rewards to investors.
Featured image from Pexels, chart from TradingView.com
