Virginia pension fund just got approval to invest in ‘yield farming’ crypto despite big losses in the space

  • A Virginia pension fund has been granted approval to invest in crypto loans to boost portfolio returns, according to the Financial Times.
  • The Fairfax County fund will allocate capital to crypto yield farming despite collapsing prices in the sector this year.

A Virginia pension fund with $6.8 billion under management won approval from its board on Friday to invest funds in cryptocurrency yield farming, according to a Financial Times report.

Fairfax County Pension Systems first announced plans to explore yield farming in May. The fund is made up of the Fairfax County Employees Retirement System and the Fairfax County Police Officers Retirement System.

Crypto yield farming includes the lending of tokens in exchange for interest payments. The move towards crypto lending for the pension fund comes even as the sector has crashed this year, notably with the fall of the Terra USD stablecoin, which was a popular vehicle for investor staking.

The Fairfax fund has previously invested in crypto, with a combined $21 million initial allocation between employee and police pensions to the Morgan Creek Blockchain Opportunities Fund in 2019. Katherine Molnar, chief investment officer of the pension system of Fairfax County police officers told the Financial Times that the investments are timely given that “what you can achieve in a yield farming strategy is really attractive because some people have pulled out of that space.”

The crypto lending slump has extended to big business this year, with companies like Three Arrows Capital and Celsius Network crashing into bankruptcy thanks to heavy losses from investors who staked their tokens.

Dolores W. Simon