The National Pension Service (NPS) has purchased a large stake in Coinbase, the largest U.S. cryptocurrency exchange, for the first time, paving the way for future direct investment in cryptocurrencies.
According to a stock holdings report filed by the NPS to the U.S. Securities and Exchange Commission (SEC) on Nov. 16, the Korean pension fund manager bought 282,673 shares of Coinbase during the third quarter. The purchase totaled US$19,934,100 (26 billion won). The average purchase price per share was US$70.50, representing a return of nearly 40 percent based on Coinbase’s closing price of US$98.15 as of Nov. 15 (local time).
While this was not the NPS’ first investment in cryptocurrencies such as Bitcoin, it was the first time that the NPS invested in a cryptocurrency exchange, which has drawn much interest from the investment industry. In the past, the NPS only indirectly invested in crypto exchanges by participating in funds raised by venture capital (VC) firms.
In 2014, the NPS was a major investor in a blind fund established by Atheneum Investment. In 2016, the fund invested in Dunamu, a blockchain and fintech company that operates cryptocurrency exchange Upbit. It has since sold the company several times since 2021, earning more than 100 times its original investment. In addition, the NPS has indirectly invested in domestic cryptocurrency exchanges Bithumb, Coinplug, and Korbit in the form of VC fund contributions.
With its stake in Coinbase, the NPS joins the ranks of major pension funds investing in crypto exchanges. Korea Investment Corporation (KIC) has been investing in Coinbase since the fourth quarter of 2021, ahead of the NPS. As of the third quarter of this year, KIC held a total of 18,118 shares of Coinbase, valued at US$1.36 million. Based on the average purchase price of US$75 per share, the investment has yielded about 31 percent year to date.
Meanwhile, the NPS had US$62.92 billion in direct investments in U.S. equities in the third quarter of this year. This represents an increase of more than 30 percent from the third quarter of 2022 (US$47.241 billion) due to a stock market recovery. The pension fund’s U.S. equity portfolio includes major big tech names such as market capitalization leader Apple, Microsoft, and Amazon. The NPS has also bought 1.08 million shares of electric vehicle maker Livian Automotive.