Lessons Learned: Canadian Pension Funds Steer Clear Of Crypto

Crypto has gained significant attention in recent years as potential investment options – however, not all investors have found success in this volatile market, including prominent Canadian pension funds. Recently, Ontario Teachers’ Pension Plan (OTPP), Canada’s largest single-profession pension plan, announced its decision to refrain from further cryptocurrency investments following their experience with the collapse of FTX.

OTPP had invested $95 million in FTX, which ultimately resulted in virtually zero returns after the exchange’s dramatic crash. Jo Taylor, CEO of OTPP, acknowledged that the fund had learned from this investment and took member feedback into consideration to stay away from further crypto investments. While the investment in FTX only accounted for a small portion of OTPP’s total assets, the fund faced criticism for dealing with a company whose founder, Sam Bankman-Fried, has been accused of fraudulent activities.

FTX’s downfall has shed light on the risks associated with investing in crypto and the importance of conducting thorough due diligence. Many investors, including pension funds, have been lured by the potential high returns in the crypto market, but the recent failures of FTX and other platforms serve as a cautionary tale.

OTPP is not the only Canadian pension fund that has faced losses in the crypto market. Caisse de dépôt et placement du Québec (CDPQ), another giant pension fund in Canada, lost $150 million after investing in the cryptocurrency lending platform Celsius. Despite conducting extensive due diligence, CDPQ still experienced significant losses, leading its CEO, Charles Emond, to express caution about further cryptocurrency investments.

The experiences of OTPP and CDPQ highlight the need for investors, including institutional investors like pension funds, to exercise caution and carefully assess the risks associated with cryptocurrency investments. The lack of regulatory oversight and the volatile nature of the crypto market make it a high-risk investment option, and investors must be prepared for the possibility of losing their entire investment.