Standard & Poor's: Interest in cryptocurrency investments is growing among local governments in the United States, with cryptocurrencies being included as part of pension fund assets.

Standard & Poor's Global Ratings Agency released a report on cryptocurrencies yesterday, the 15th, stating that there is increasing interest from state and local governments in the United States towards cryptocurrencies. Some local governments have started accepting digital currencies as a form of tax payment and payment tool, and even some retirement funds include cryptocurrencies in their investment targets.

Standard & Poor's Cryptocurrency Report

The beginning of this report mentions that traditional fixed-income investment products are affected by the low-interest rate policies of the U.S. government, resulting in low investment returns. Despite the higher investment risks associated with cryptocurrencies, their potential for higher returns has sparked interest in cryptocurrency assets and the blockchain industry among many local governments and U.S. public finance issuers. The report states:

The strong investment performance of cryptocurrencies in 2020 to date has helped alleviate retirement and investment pressures for local governments that included cryptocurrencies in their portfolios during the Covid-19 pandemic.

Although the recent high returns of the past year may be enticing, Standard & Poor's also acknowledges that investing in blockchain technology and cryptocurrencies may pose significant credit risks. However, the report also presents another perspective, stating that cryptocurrencies are not merely for investment purposes. The report mentions:

The benefits of cryptocurrencies extend beyond being investment tools and include the convenience of electronic transfers and lower payment costs compared to current intermediaries.

Cryptocurrency Use Cases Across the U.S.

Standard & Poor's compiles current applications and investment cases of cryptocurrencies across the U.S. Below are some key examples:

Use Cases

1. Residents in Ohio can now pay taxes with Bitcoin.
2. The city of Williston in North Carolina accepts water and electricity bills in cryptocurrency, with potential for further adoption in the future.
3. The California Intercontinental University, an online university, accepts tuition payments in cryptocurrency.

Investment Cases

1. The New Jersey state pension plan has allocated a small portion of its investment portfolio to blockchain and digital asset holdings companies.
2. Two retirement funds in Fairfax City, Virginia, have begun investing in blockchain technology and Bitcoin, steadily increasing their investment amounts.

Not long ago, cryptocurrencies were widely seen as a bubble lacking any intrinsic value, often compared to the Dutch tulip bulb market bubble. However, over time, with new applications emerging in the cryptocurrency industry and more adoption cases showing a shift in public mindset, the report concludes:

With the emergence of new areas like DeFi, NFTs, and IoT connectivity, it is increasingly evident that cryptocurrencies and digital marketplaces are a thriving emerging industry that can help expand state and local government businesses and economies.