Japanese Pension Fund to Hedge Currency Risk with Crypto Allocation

The fund plans to allocate 1% of its total assets to a passive multi-asset crypto fund. This decision follows six years of research, during which executives concluded that the digital asset market has sufficiently matured. Rather than seeking speculative short-term gains, the fund views crypto as a hedge against the potential decline of the U.S. dollar as a global reserve currency. The strategy involves reducing yen-denominated holdings from 80% to 70% while diversifying into gold, emerging-market currencies, and digital assets.

Institutional caution remains a priority for the fund, which maintains a robust funded ratio exceeding 140%. By utilizing a passive management structure, the fund aims to minimize direct exposure risks while testing the utility of crypto within a defined benefit framework. This shift coincides with broader regulatory movements in Japan, including legislative efforts to reclassify crypto assets under the Financial Instruments and Exchange Act and ongoing discussions regarding the potential legalization of crypto exchange-traded funds by 2028.