One of the largest U.S. public pension funds, the California Public Employees’ Retirement System (CalPERS), is engulfed in a heated debate over Bitcoin exposure. Managing over $506 billion, the fund has drawn attention as candidates for its upcoming board election sharply clash over cryptocurrency investment strategies. The debate intensified after it was revealed that CalPERS holds roughly 410,000 shares of Strategy (formerly MicroStrategy), the world’s largest publicly traded Bitcoin holder, making indirect Bitcoin exposure a key point of contention.
The debate goes beyond the mere inclusion of a specific asset, serving as a barometer for how public pension funds might embrace innovative or high-risk investments in the future. In particular, some market observers are watching to see whether CalPERS could get involved in next-generation blockchain infrastructure projects such as Bitcoin Hyper, a project aiming to create a new Bitcoin ecosystem with enhanced scalability and speed as a Layer 2 token. If a conservative, massive public pension fund like CalPERS were to participate, it could significantly boost both the credibility and regulatory legitimacy of the technology and the market, potentially triggering a wave of institutional investor adoption and accelerating ecosystem growth.
CalPERS board candidates are sharply divided over Bitcoin investment exposure. Incumbent board member David Miller criticized challenger Dominic Bae’s Bitcoin education organization, arguing that cryptocurrency has no place on the board and emphasizing that investing in Bitcoin-related companies is entirely different from directly purchasing Bitcoin. Bae countered by noting that CalPERS already holds shares in the world’s largest publicly traded Bitcoin company and that selecting specific assets is the responsibility of the chief investment officer. While he did not advocate for direct Bitcoin purchases, Bae stressed the need for an open and honest discussion.
Other candidates are generally negative toward Bitcoin, though the intensity varies. Steve Mermel warned it has no place in the pension system, citing past high-risk failures. For example, the Ontario Teachers’ Pension Plan (OTPP) invested about $95 million in FTX in 2022 and lost the entire amount when the exchange collapsed. Although a small fraction of total assets, it shook pensioners’ sense of stability and trust. Troy Johnson took a cautious stance, wary but not completely opposed. Jose Luis Pacheco, while skeptical of Bitcoin itself, praised blockchain’s potential and the need for further research and partnerships.
The forum also covered a range of issues beyond Bitcoin, including private equity investments, fee transparency, and CalPERS’ principles on climate change and governance. Some retiree groups even announced plans to push for independent audits, citing the opacity of private equity intermediary fees. Experts note that private equity investments involve far more complex fee structures than traditional stock or bond management. Typically, funds pay a fixed management fee to the investment manager while also shouldering a performance-based fee, and the overlap of these two components makes it difficult to track total costs, potentially creating a gap between actual returns and net gains.
While it is unlikely that CalPERS will make immediate policy changes, the debate serves as a key test of how far the country’s largest public pension fund is willing to embrace high-risk, high-reward assets and engage with blockchain and cryptocurrency. Ultimately, it goes beyond any single asset, highlighting the balance public pension funds must strike between stability and innovation. CalPERS’ future moves will send important signals to other pension funds and institutional investors and could shape a broader global conversation on institutionalizing the intersection of traditional finance and emerging technologies.
