Neither the author, Kai Morris, nor this website, The Tokenist, provide financial advice. Please consult our website guidelines before making any financial decisions.
In an interview at the CNBC Financial Advisor Summit, U.S. Senator Cynthia Lummis expressed her desire for Bitcoin to play an important role in state pension funds. She spoke about the importance of Bitcoin as a store of value and her concern that the U.S. dollar could be destabilized at some point in the future. This is not the first time Bitcoin has been mentioned in this context, as some retirement plans are already benefiting from BTC.
Diversification of the retirement portfolio
Cynthia Lummis, US Senator for Wyoming, spoke to Ylan Q. Mui, CNBC’s Senior Congressional Correspondent, where she shared her thoughts on the current state of the US economy. She particularly focused on retirement plans and urged the government to keep an eye on Bitcoin.
In the interview she explained:
“I would like cryptocurrencies like Bitcoin to become part of a diversified asset allocation that is used in pension funds and other ways for people to save for the future. Whether you’re an employee who has a pension fund – I would love to see these pension funds invested in bitcoin and other cryptocurrencies that are good stores of value – but I would also like to see individuals use bitcoin and cryptocurrencies of their choice who are safe, who have overcome the hurdles of combating money laundering and the law on banking secrecy. “
Their rationale for this is not only because Bitcoin has performed well over the past decade, but because of its limited existence and algorithmic means of getting more into circulation. At this point she said:
“Since there will only be 21 million bitcoins ever mined, it’s a good store of value because it defined scarcity. And the way it was set up so that some bitcoins were unlocked every 10 minutes, less and less over time until all 21 million were produced, is conceptually easy to see why it’s such a good store of value.
Senator Lummis isn’t the only government official calling for bitcoin investments. In April, the San Francisco Deputy Sherif’s Association (SFDSA) announced that it had added Bitcoin to its investment portfolio. Although not specifically stated by the SFDSA, these investments are expected to go into retirement planning.
Pensions controlled by the police & fire brigade MASSIVE capital amounts.
(I called them “Guns’ n Hoses” when I was doing institutional sales 😂)
They often have very good asset allocation methods in place. So assigning it to #Bitcoin likely required a lot of care and thought.
– Bruce Fenton (@brucefenton) June 29, 2021
This is important because police pension funds are often extremely careful and conservative with their investments. If they bought Bitcoin, it means they don’t consider it too much of a gamble or too much risk.
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The US dollar scares investors
In addition to speaking highly of Bitcoin, Senator Cynthia Lummis also voiced concerns about the future of the dollar. She noted:
“With Congress spending trillions of dollars in flooding our and global economies with US dollars, there is no way we can depreciate the value of the US dollar. So I’m concerned that all of our retirement funds are in US dollars. So within the scope of diversification, a very diverse asset allocation so that you don’t have all your eggs in one basket. “
This thought is becoming more common among US investors. The Federal Reserve has scared economists and speculators with its stimulus programs, which leads countries like Deutsche Bank to fear that uncontrollable inflation could devastate the country. It may even have started as the CPI for All Urban Consumers (or CPI-U) shows patterns similar to the 2008 financial crisis.
In addition to promoting Bitcoin for investment, Senator Lummis discourages people from relying on the US dollar. This makes sense because the 2008 financial crisis caused pension funds to collapse and lose value, affecting the oldest and most vulnerable members of society. If we are entering (or are already in) another recession, it is wise to seek outside means to protect retirement savings.
It is possible that Bitcoin will become a common element in most mutual funds in the months and years to come. This is especially true when people are concerned about what will happen to pensions should another economic collapse occur. In this sense, Bitcoin acts as a hedge against financial uncertainty.
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About the author
Kai Morris is a crypto and DeFi specialist and researcher. He holds a BA Hons in Law and Philosophy from the University of Essex, where he studied complex economic, legal and ethical theories relevant to the FinTech landscape. Kai has a particular interest in decentralization and privacy blockchains as they relate directly to our human rights and our prosperity. He takes care of Blockchain, DAG and DeFi in order to positively change our lived experiences. Kai is an investor in Ethereum and Monero.