MassMutual’s big bet on Bitcoin is being called “an incredible moment in the history of both Bitcoin and the insurance industry,” “another milestone in the Bitcoin adoption by institutional investors,” and “the biggest Bitcoin news of 2020.”
On Dec. 10, 169-year-old Massachusetts Mutual Life Insurance Company announced it purchased $100 million in Bitcoin for its general investment account, representing 0.04% of that nearly $235 billion account.
In addition, MassMutual announced a $5 million equity investment in NYDIG, a leading provider of institutional investment and technology solutions for Bitcoin, who also facilitated MassMutual’s Bitcoin purchase. The firm’s Bitcoin position is held on NYDIG’s secure, audited, and insured custody platform.
“We are proud of this incredible moment in the history of both Bitcoin and the insurance industry. This reflects the expansion of Bitcoin to insurance company general investment accounts, as well as NYDIG’s unique ability to meet the complex needs of the most demanding institutional investors,” said Robert Gutmann, co-founder and CEO of NYDIG.
MassMutual’s equity investment comes during a period of substantial growth for NYDIG, which now has over $2.3 billion of digital asset balances under custody—including for a growing list of leading insurance company general investment accounts.
“We believe that having an equity stake in NYDIG as well as a Bitcoin position in our general investment account will help us deliver long-term value to our policyowners,” said Tim Corbett, Chief Investment Officer of MassMutual. “We look forward to further exploring additional ways to work with NYDIG, consistent with our ongoing focus on innovation and diversification.”
Ross Stevens, founder and Executive Chairman of NYDIG and founder and CEO of Stone Ridge Holdings Group, NYDIG’s parent company, said, “Given their track record of innovation, there is nothing surprising to me about MassMutual leading their industry yet again by both seeing, and acting on, the long-term value of the Bitcoin monetary risk premium for their policyowners.”
JP Morgan Chase & Co. took notice of the move, with company strategists cited in Bloomberg saying it highlights the potential for additional institutional demand for Bitcoin in coming years.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors,” the strategists said. “One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
The strategists added that insurance firms and pension funds are unlikely to ever make high allocations, but even a small shift toward the cryptocurrency could be significant. They also noted that insurers and pension portfolios face regulatory hurdles relating to risk levels and liability mismatches, likely limiting how much they can put into Bitcoin.
Noted Bitcoin Bull Mike Novogratz also took note of the MassMutual move, tweeting, “This might be the most important $BTC news of 2020. An insurance company buys bitcoin for its general account. This needs fed approval. It’s a HUGE deal.”
The billionaire CEO of Galaxy Investment Partners, which focuses on cryptocurrency investments such as Bitcoin and Ethereum, made headlines in late November for predicting the price of Bitcoin would hit $65,000 while offering advice to “Game of Thrones” star Maisie Williams on Twitter.
Bitcoin, the digital currency created in 2009 following the housing market crash, has more than doubled in price this year. As of 1 p.m. EST on Dec. 15, one Bitcoin was worth $19,416.50. Proponents see it as a kind of digital gold, likely to retain its value during times of turmoil and as a hedge against inflation despite the historical volatility of the cryptocurrency.
There are no physical bitcoins, only balances kept on a decentralized public ledger system known as a blockchain that everyone has transparent access to, that—along with all Bitcoin transactions—is verified by a “massive amount of computing power,” as Investopedia puts it.
The 401k market has slowly been dipping its feet into the cryptocurrency pool, with a pair of “Bitcoin 401k plans” launched in 2020 (see links below).
SEE ALSO:
- DAiM Launches ‘First ERISA-Compliant’ Bitcoin 401k Plan
- Bitwage Launches ‘World’s First’ Bitcoin 401k Plan
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
