The National Pension Service (NPS) of South Korea, which manages assets worth around $930 billion, is considering exposure to digital assets as new legislation is enacted. A law now allows direct Bitcoin allocations, subject to stringent limitations as of May 2025, which enables the fund to adopt indirect strategies. The bill has bipartisan support, and the political alignment on digital asset regulation is increasing.
The NPS has already been indirectly investing in the sector. It purchased $34 million worth of MicroStrategy stock in 2024, a company with significant holdings in Bitcoin, along with $45 million of Coinbase equity. These investments show risk aversion, although they are not directly exposed to volatility. The new framework allows restricted Bitcoin allocations and requires a risk assessment, marking a major policy shift.
Kab Lae Kim, a senior research fellow at the Korea Capital Market Institute, encouraged the NPS to consider Digital Asset Treasury (DAT) companies and spot cryptocurrency exchange-traded funds (ETFs). He proposed that these intermediaries would minimize the risk of exposure and enhance the development of industries. Kim states that these measures would help align the NPS and fiduciary responsibilities with stability and long-term returns.
Pension funds and endowments around the world are increasingly investing in digital assets. In December 2024, the AMP pension fund of Australia invested $27 million in Bitcoin, and the Michigan state pension fund invested $6.6 million in a Bitcoin ETF in the US. This is part of a larger trend of diversifying into cryptocurrencies. Analysts see South Korea's involvement as part of this international institutional shift.
Political leaders have highlighted the importance of regulatory transparency as a way to promote a safe investment environment. Spot Bitcoin ETFs and transparent structures are among the models that Democratic Party candidate Lee Jae-myung has asked to be approved to ensure that investor trust remains intact. Furthermore, Policymakers are seeking to strike a balance between innovation and protecting investors with over 16 million South Koreans in the digital asset markets.
Analysts remain concerned about Bitcoin's ongoing volatility. Nevertheless, even a minor Bitcoin distribution by the NPS could influence global liquidity. With Bitcoin's supply already limited, the involvement of large institutions may further reduce its availability. Industry experts believe that NPS's participation may accelerate mainstream adoption, which could encourage other asset managers and pension funds to join.
The further actions of the NPS will be centered on risk control and progressive exposure. The new law imposes safeguards on digital asset allocations, accounting for only a small portion of total assets, to prevent volatility from compromising pension stability. The NPS may set an example to other pension funds by experimenting with entry using DAT companies and ETFs to find a balance between opportunity and risk.
This move by South Korea can be critical to the world markets. By strategically incorporating the use of Bitcoin and digital assets into the NPS, it may represent a new step in the institutional adoption of new cryptocurrencies as established assets within long-term investment portfolios.