NPS Dives into Crypto: Acquires 280K Coinbase Shares per SEC Filing

• The NPS of South Korea invested in Coinbase, acquiring over 280,000 shares in Q3 2022.
• The investment, the pension fund’s first in Coinbase, cost $19.9 million and is now valued at $27.7 million.
• Coinbase shares experienced a 39% return on investment within a few months.

The National Pension Service (NPS) of South Korea has purchased a sizable stake in leading cryptocurrency exchange Coinbase, marking the pension fund’s first investment in the company. According to a recent SEC filing, the NPS acquired over 280,000 Coinbase shares in Q3 2022, a position now worth $27.7 million.

The NPS, one of the world’s largest public pensions, bought 282,673 Coinbase shares last quarter at a cost of around $19.9 million. As of November 15, those shares were valued at $27.7 million based on Coinbase’s closing price of $98.15 per share. This translates to a 39% return on investment in a matter of months.

While the NPS has avoided direct cryptocurrency investments in the past, it has gradually opened up to crypto-related equities. The pension fund was criticized last year by South Korea’s National Assembly for investing in a crypto business. The NPS maintained it was only investing in the exchange itself, not the underlying cryptocurrencies.

The timely Coinbase purchase comes as the stock has skyrocketed 170% year-to-date. After starting 2022 at around $37 per share, Coinbase hit a peak of $110 in July before settling near $100 this month. The stock remains 74% below its all-time high, close to $330 in September 2021.

Coinbase has rallied in 2023

Coinbase has managed to rally in 2023 despite ongoing legal troubles with the SEC. In June, the SEC filed a lawsuit alleging Coinbase offered securities on its platform without proper registration. Coinbase has strongly contested the lawsuit, recently arguing the SEC’s definition of a security in crypto is too broad.

The impressive rebound of Coinbase stock reflects optimism about long-term crypto adoption, even with recent industry turmoil. The high-profile collapse of crypto exchange FTX has raised fresh doubts among some investors. However, others see it as an opportunity for leading firms like Coinbase to increase market share.

As a regulated U.S. exchange, Coinbase could attract users fleeing offshore platforms with lax oversight. The company has also taken a conservative approach to asset listings compared to FTX, potentially insulating it from cascade effects in crypto markets.

For the NPS, the Coinbase investment offers exposure to the growing crypto economy while avoiding direct cryptocurrency speculation. The pension fund oversees over $700 billion in assets and serves over 20 million South Koreans. Its stake in Coinbase gives it a foothold in the crypto space as both regulators and investors grapple with the fast-moving industry.

With Coinbase shares continuing to outperform this year, the NPS is in a position to record even greater returns if crypto adoption persists over the long run. However, the volatile nature of cryptocurrencies means Coinbase’s future prospects remain uncertain.