Bitcoin and Beyond
Evolving for the digital world of tomorrow
By: Tim Corbett
Chief Investment Officer
MassMutual Life Insurance Co.
Date: Sep. 30, 2021
As a company that has been around for over a century-and-a-half, we have witnessed many changes and have continuously evolved and adapted while looking ahead to what’s next. Last year, MassMutual took its first step into cryptocurrency when we made an investment in bitcoin for our General Investment Account (GIA). We’re always looking for opportunities to both fuel greater innovation at our company and capitalize on market trends – and our investment in bitcoin allows us to do both.
Cryptocurrency & the blockchain ecosystem
As we have watched the emergence of new kinds of financial infrastructures in recent years, we have come to believe that cryptocurrency and the blockchain ecosystem have the potential for significant growth and transformation across our industry, amongst others, in the years to come. We decided that it was imperative to invest in cryptocurrency itself and to begin to lay the groundwork for ways we can incorporate it into our business. This includes offerings and technology initiatives across the company, such as today’s launch of Flourish Crypto – a cryptocurrency investing solution built for Registered Investment Advisors (RIAs) and their clients.
Investing in bitcoin
In line with MassMutual’s overall commitment to diversification and innovation, we have come to view bitcoin as a potential store of value over the long-term. Bitcoin’s unique characteristics—including digital scarcity, known supply growth, transfer characteristics, and hard cap on the total number of tokens—open the possibility that it may serve as a kind of “digital gold,” with the potential for significant price appreciation.
At the same time, the asset class is new and still undergoing price discovery, with significant volatility, uncertainty, and risk. We believe that the volatility will decrease as more institutions take positions in the space, but it will take multiple market cycles before we have robust data to further describe the characteristics of the investment, such as correlations to other asset classes or whether it will serve as an inflation hedge. In our position as a leading mutual life insurance company, we have the ability to take that long view.
While the space is new, Bitcoin is not untested. And, while the regulatory environment around cryptocurrency is still developing, we welcome thoughtful and prudent regulation that will accelerate the industry, while protecting investors.
Given these considerations, we made an investment in bitcoin for our GIA, balancing appreciation potential with risks, and made an equity investment in NYDIG, which provides investment and technology solutions for Bitcoin. This also reflects our broader investment strategy – to capitalize on evolving opportunities, while remaining invested across a variety of asset classes to incorporate a significant level of risk diversification. With this opportunity, sitting on the sidelines was not a risk we wanted to take.
Cryptocurrency and Blockchain technology
Beyond investing, we are excited about many applications of blockchain technology. The technology has the potential to transform how companies like MassMutual record, store, and manage data, leading to increased efficiency and security. We’re carefully monitoring developments in treasury settlements, derivatives, bond issuance, and tokenization of securities. We’re actively thinking through developments in payments and remittances, including the role of stablecoins and central bank digital currencies. Given our long-term focus, we will continue to monitor, invest in, and even participate in this change.
With that said, it’s easier to say that technology will change the way we do business than it is to predict how things will change. That’s why we are taking a diversified approach to the space, from investing in bitcoin, as well as blockchain and crypto companies involved in infrastructure and decentralized finance (DeFi), to offering financial professionals and qualifying clients access to a bitcoin fund through our broker-dealer, to supporting the launch of Flourish Crypto. We believe there will be numerous success stories as the technology matures, and we will continue to explore ways of integrating cryptocurrency into different areas of our business.
To hold true to our purpose and help us deliver long-term value to our policyowners, MassMutual will continue to look forward and lead the way, whether by investing in digital transformation initiatives, meeting market demand with our products and offerings or by pushing ourselves into emerging sectors to ensure that our investment portfolio remains resilient in the years to come. We believe that cryptocurrency and blockchain technology are increasingly becoming part of the financial landscape and look forward to continuing our journey at the forefront of institutional adoption.
Forward Looking Statements
This article may contain forward looking statements that are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied.