Michigan Hosts First U.S. Pension Fund to Buy Spot Ethereum ETF Shares

Michigan’s retirement fund is the first U.S. pension fund to include spot Ethereum exchange-traded fund (ETF) shares in its portfolio.

On Nov. 4, the State of Michigan Retirement System (SMRS) disclosed that it acquired 460,000 shares in the Grayscale Ethereum Trust (ETHE) worth $10 million.

SMRS also purchased 460,000 shares in Grayscale’s Ethereum Mini Trust (ETH) worth $1.1 million. The purchases rank SMRS as the fourth-largest institutional holder of ETHE shares, and the second-largest holder of ETH shares.

The ETF shares represent fractional ownership of Ethereum held by Grayscale on behalf of the trusts’ shareholders, with the trusts tasked with custodying the assets. Grayscale Ethereum Mini Trust is seeded with assets currently backing ETHE and offers lower fees than ETHE.

SMRS also bought $6.6 million worth of shares in the ARK 21Shares Bitcoin ETF in July, meaning the fund holds greater exposure to Ethereum than Bitcoin.

However, with SMRS managing $20 billion in assets, the fund’s crypto ETF holdings account for less than 0.1% of its assets under management.

U.S. pension funds buy crypto ETF shares

Michigan isn’t the only U.S. state pension fund buying up crypto ETF shares.

A May 14 SEC filing shows Wisconsin's state pension invested in spot Bitcoin ETFs, purchasing $99 million in BlackRock’s Bitcoin Trust (IBIT) and $63.7 million in the Grayscale Bitcoin Trust.

On Oct. 30, Florida’s Chief Financial Officer, Jimmy Patronis, issued a letter to the State Board of Administration (SBA), which oversees Florida’s public employee retirement funds, requesting the board assess the feasibility of adding digital assets to the state's pension fund.

On March 20, Arizona state legislators introduced a bill advocating for including Bitcoin ETFs as part of the retirement plans for state employees.

U.K. pension fund buys BTC

Across the Atlantic, the first U.K. pension fund has invested in BTC directly.

Facilitated by British pension consultancy Cartwright, the unnamed pension fund allocated 3% of its $65 million assets to Bitcoin after lengthy consultations with scheme trustees, according to a report from Corporate adviser.

Cartwright is also launching a Bitcoin Employee Benefits scheme allowing companies to pay employees in Bitcoin.