Rest Super could become the first Australian pension fund to dip its toe into crypto, as institutional investment interest heats up

Rest Super could become the first Australian pension fund to dip its toe into crypto, as institutional investment interest heats up
Rest Super could become the first Australian pension fund to dip its toe into crypto, as institutional investment interest heats up. Getty Images
  • At its annual general meeting, Rest Super’s chief investment officer told members that the fund plans on investing in crypto.
  • The public disclosure makes Rest the first of the major super funds to signal material investment in crypto assets, as regulators and policymakers warm to the asset class.
  • It came as no surprise to the market, where it’s thought that the first fund to invest will trigger a wave of similar commitments to the space.
  • Visit Business Insider Australia’s homepage for more stories.

In a move tipped to trigger a wave of institutional crypto investment in Australia, Rest Super has become the first Australian superannuation fund to signal real interest in exposing member portfolios to the asset class. 

At the fund’s annual general meeting on Tuesday evening, Rest Super’s chief investment officer Andrew Lill gave crypto the go-ahead, telling members that a small portion of their funds will soon be invested in crypto assets. 

“It’s still a very volatile investment, so any allocation exposure we make to cryptocurrencies is likely to be part of our diversified portfolio as initially a fairly small allocation that may, over time, build,” Lill said. 

“We see it as a very interesting and important part of our portfolio going forward into the future.”

The fund, which manages some $66 billion in managed super, told Business Insider Australia that while it isn’t poised to commit to an investment in the immediate future, medium-term exposure is “certainly” being considered.

“We are currently conducting extensive research into the asset class prior to making any decisions,” Lill said. “We are also considering the security and regulatory aspects of investing in this class.”

Leaders from across the market weren’t the least bit surprised, telling Business Insider Australia that the news was due to arrive “sooner or later”, even as other major funds have postured themselves in opposition to the idea ahead of the rollout of a licensing regime proposed by the Senate last month. 

Rest’s public interest in crypto follows a flurry of hesitation from chief investment officers at major funds across the country. 

Earlier last month, Queensland Investment Corporation (QIC) was reported to be considering similar exposure. The fund later stamped out the chatter, telling Business Insider Australia that reports had “incorrectly implied” the fund had plans to expose fund members to crypto. 

Even still, QIC’s head of currency, Stuart Simmons, said “as the segment matures”, there’s a likelihood that super funds seek out exposure, but that “it’s probably going to represent a trickle, rather than a flood”.

Fast-forward to this week, and Australian Super took a similar position, ruling out an investment in crypto with member funds, even if only in the short term. 

But exchange managers maintain that high-level institutional investment is only the natural next step in mainstreaming crypto in Australia. 

Lasanka Perera, chief operating officer at crypto exchange Independent Reserve, told Business Insider Australia that most fund managers are already exposed personally, and are just waiting for the market tipping point.

“There’s already a universe of mid-market companies and family offices that are deploying capital [into crypto] right now,” Perera said. “But you’ll get to see much larger companies that are deploying capital into crypto assets, using that to generate yields and capital gains.”

Perera said the first fund to materially invest in crypto could trigger a wave of institutional crypto investment, even though there’s plenty of perceived resistance from major investors. 

“There is huge resistance, but I think it’ll happen sooner rather than later,” he said.

“So, it might seem to us like it may take five or 10 years for super funds to allow their investors to get crypto exposure,” he said. “But I think if one goes, then all of a sudden you see a few others get into it.”

A recent report handed down by a Senate committee late last month proposed a new government-backed licensing regime for digital currency exchanges mimicking the work of Singaporean regulators.  

If legislated, Perera said, it would be a boon for institutional investment in Australia, and could prompt an uptick in exposure earlier than some might think. The possible introduction of a bitcoin ETF, or “ETP”, “changes things around” and could bring it forward even sooner.

Is crypto a ‘fad’?

It’s been a big month for crypto in Australia, as regulators, policymakers, and even the banks have warmed to the asset class after years of dismissing the market as nothing but speculative fodder. 

In an address to the Australian Financial Review’s 2021 Super and Wealth Summit on Monday, Senator Jane Hume said both industry and government leaders “need to acknowledge” that crypto is “not a fad”, urging policymakers to tread cautiously but not fearfully.

“Don’t be the person who thought the iPhone would never take off because people would prefer to have their music and telephone on separate devices,” Hume said. “Don’t be the person who was still doing their financial models by hand in 2001, rather than using Excel.”

“Don’t be the person in 1995 who said the internet was just a place for geeks and criminals and would never become mainstream,” she said. 

The Senator’s address arrived just days after Tony Richards, the Reserve Bank of Australia’s outgoing head of payments policy, delivered his final overture at the central bank, warning economists that the widespread uptake of crypto is a “fad” destined to fade away. 

Unsurprisingly, the market disagreed. Steve Vallas, CEO of Blockchain Australia, said the central bank’s position isn’t one reflected in market data, but instead a line borne of outmoded narrative arcs in need of “sophisticated” consideration.

It’s a position the banks are even warming to. Earlier this month, the Commonwealth Bank of Australia announced that it will soon offer its customers the ability to buy, hold and sell crypto through its CommBank app via a partnership with the US exchange, Gemini. 

CBA CEO Matt Comyn said the announcement emerges in response to surging appetite for crypto investments among the bank’s customers, who have long been calling for integration. 

“We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform,” Comyn said.