There’s Drug Money in Cryptocurrencies: Canadian Pension Fund

“how much demand for money laundering there is in the world”

Bjarne Graven Larsen, Chief Investment Officer of Canada’s third-largest pension fund, the Ontario Teachers' Pension Plan, said his fund has no plans of getting involved with cryptocurrencies.

Speaking to BNN, Larsen claimed the key concern his fund had was lack of regulation, owing to which a lot of money obtained from illicit activities is flowing through cryptocurrencies.

“We are a bit skeptical in the sense that it’s not really regulated, you’re not really sure who’s behind this. Personally, I do not like the fact that you know there’s a lot drug money, there’s a lot of illegal money in these cryptocurrencies.”

While digital currencies have been hailed as the future of money, many remained unconvinced. BlackRock head Larry Fink, for example, has gone on record to state that the popularity of Bitcoin (which passed the $7,000 mark this year) reveals nothing more than “how much demand for money laundering there is in the world”. In addition, the actual worth of cryptocurrencies has been called into question by prominent figures in the finance industry, such as billionaire investor Warren Buffet, who refused to classify crypto as ‘currency’, claiming it is “not a value-producing asset”.

The unregulated nature of cryptocurrencies, and the anonymity of transactions has also raised a great deal of suspicion among governments and central banks. Recently, the U.S. Secretary of the Treasury expressed concern about the illegal uses to which cryptocurrencies were possibly being put. Governments of countries such as China, India, and Russia have all refused to accept privately-held cryptocurrencies; in addition to establishing strict rules and regulations (and in some cases issuing outright bans), the countries have also vowed to release their own central bank-issued digital currencies.

“I think you need to have somebody regulating them to make sure that everything that happens in that world is happening in a lawful way.”

While Larsen (whose fund held assets worth $180.5 billion for teachers of Ontario, as of June 30, 2017) distanced the Ontario Teachers' Pension Plan from Bitcoin and the like, he did praise the blockchain technology which underpins digital currencies. However, he does not foresee a future for cryptocurrencies, stating:

“The blockchain technology behind it is great, but I’m not sure that Bitcoin or any other of these cryptocurrencies will do well long-term.”