According to sources close to the universities: Harvard, Yale Brown and the University of Michigan, as well as several other universities have started to acquire cryptocurrencies by buying bitcoin directly from Coinbase.
Blockchain technology and cryptocurrency are proving to be present in several industries worldwide, including education.
Universities and colleges have also quietly begun to increase their understanding, appreciation and involvement in blockchain technology.
Some academic institutions believe that it is worthwhile to teach this new technology to the next wave of industry leaders and champions and are confident enough to invest in it themselves over the long term.
This entry into the crypto-sphere has therefore been made primarily through blockchain courses and training. For example, there are blockchain courses available at some of the best colleges in the United States such as Cornell University at Stanford and MIT.
In addition, some of these leading educational institutions are even putting their money where their mouth is by investing their endowments in cryptographic funds.
University endowments are a set of assets held by universities to assist them in their educational mission. They are generally made up of money or other assets donated to these institutions.
In July 2018, Yale economists conducted a study that found that investors should allocate up to 6% of their portfolio assets to cryptocurrency.
The study entitled 'Risk and Return of Cryptocurrency' by Yukun Liu and Aleh Tsyvinski was used to examine the asset class from a traditional financial perspective rather than a technical one.
In other words, the study examined the pricing models of the three main cryptocurrencies, Bitcoin, Ripple and Ethereum, comparing them to traditional asset classes.
'Risk and Return of Cryptocurrency' had concluded that cryptocurrencies offset their high volatility with higher returns. The Sharpe ratio, a risk-adjusted measure of asset performance, for cryptocurrencies is higher than for stocks and bonds. Thus, an investor in cryptos has to accept a higher risk, but will obtain a return that will more than compensate for it.
The study also concluded that even conservative investors should hold cryptos in their wallets.
Shortly after this research, Yale University Investment Director David Swensen made headlines by supporting two venture capital funds, one led by Andreessen Horowitz and the other launched by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang.
Aleh Tsyvinsky said in an interview:
'Most of the research on cryptocurrency comes from a computer perspective. However, a comprehensive economic analysis is lacking. We've done something very simple. We said: Let's use classical financial tools to help us understand cryptos better'.
In October 2018, it was announced that Yale was investing in the Crypto Paradigm Fund, which had raised $400 million.
Yale University's Ivy League school was one of the investors that helped a new fund focused on cryptomoney raise $400 million. The fund, named Paradigm, was launched by Coinbase Inc. co-founder Fred Ehrsam, former Sequoia Capital partner Matt Huang, and Charles Noyes, a former employee of crypto fund Pantera Capital.
Harvard, Stanford, and MIT made the same decision as Yale. Several other universities have followed Yale's lead in supporting encrypted venture capital funds, including Harvard, Stanford, Dartmouth College, MIT, the University of North Carolina, and the University of Michigan.
As explained earlier, in October 2018, a report published by a technology news site indicated that several prestigious American and Ivy League universities had invested in crypto funds.
The report cited that 'Harvard University, Stanford University, Dartmouth College, Massachusetts Institute of Technology (MIT) and the University of North Carolina' have all invested capital in cryptocurrency.
Harvard, Yale, Brown and the University of Michigan are among the most prestigious universities in the world, and their endowments are in part a reflection of this. Harvard, which regularly tops the list of universities alongside Stanford, Oxford and Cambridge, has an endowment of about $41.9 billion, the largest in the world by any distance.
The major academic players supporting this emerging asset class provide significant support. With nearly $30 billion in its endowment, Yale is considered the second largest endowment after Harvard's $39.2 billion.
Several other colleges and universities, including the University of Michigan, have invested directly in cryptocurrency.
Ivy League universities such as Harvard and Yale have stimulated the crypto industry by investing several million dollars in companies related to cryptocurrency.
Harvard's financial report for 2020 highlights an allocation of 18.9% public funds, 23% private funds and 36.4% hedge funds, although it does not specifically mention digital assets.
According to Coindesk, some of the largest university endowments in the United States have been discreetly purchasing bitcoin for about a year through Coinbase accounts and other exchanges.
According to the source, there are quite a few foundations allocating some money to cryptocurrency right now.
When Coindesk sought to interview them, Yale and Brown did not respond to requests for comment at the time of going to press. The Harvard and University of Michigan endowments and Coinbase also declined to comment.
According to the source:
'It could be as early as mid-2019'. 'Most have been for at least a year. I think they will probably discuss this publicly at some point this year. '
In Coinbase Prime's '2020 in review' report, the exchange notes that its client base 'now includes traditional, more conservative institutions such as university endowments, public companies, hedge funds and other multi-strategy allocators'.
According to the result of the Yale study in 2018, investors are expected to allocate up to 6% of their portfolio assets to cryptocurrencies. It turns out that they have followed their own research and now hold Bitcoins. However, none of the universities mentioned above have confirmed this. Would this discreet investment in bitcoin have an impact on the psychology of cryptonauts? Case to follow
Written by Laetitia Harson, Project Manager
Cartam: Free marketplace for cryptocurrency users
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