Virginia pension funds plan to invest in crypto ‘yield farming’

(Bloomberg) — Fairfax County, Va., is considering putting pension fund money into two crypto funds that use the investment strategy known as yield farming.

The funds, if approved in the coming days, will be used to provide liquidity on decentralized cryptocurrency exchanges, according to Katherine Molnar, chief investment officer at the Fairfax County Police Officers Retirement System. She made the comments at the Milken Institute Global Conference in Los Angeles on Tuesday.

Fairfax County was one of the first U.S. counties to invest retirement money in crypto-related investments in 2019. Molnar expects the investments being considered will offer a return of at least 9% . Fairfax’s crypto-focused investments make up more than 8% of its portfolio, she said.

Fairfax took a more direct bet on cryptocurrencies last year. The Fairfax County Police Officers Retirement System and the Fairfax County Employees Retirement System have invested $50 million in the main fund of Parataxis Capital Management LLC, which buys various digital tokens and cryptocurrency derivatives .

Fairfax is the latest mainstream institution to enter the world of decentralized finance, which allows people to trade, borrow and often lend anonymously and without intermediaries such as banks. Wall Street’s trading powerhouse, Jane Street, said on Tuesday it would borrow through a DeFi app.

“We view this as a growth investment,” Molnar said.

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