In a landmark development for the UK’s financial sector, an unnamed British pension fund has allocated 3% of its £50 million portfolio directly to Bitcoin.

This strategic move, facilitated by pension advisory firm Cartwright, marks the first instance of a UK pension scheme investing in cryptocurrency.

The decision followed a comprehensive due diligence process, addressing environmental, social, and governance (ESG) considerations, investment potential, and security measures. Cartwright’s Head of Digital Assets, Glenn Cameron, emphasized the thoroughness of the consultations leading up to the investment.

Unlike other funds that have opted for Bitcoin-linked exchange-traded funds (ETFs), this pension scheme chose to hold the asset directly. To enhance security, the private key associated with the Bitcoin investment has been distributed across five independent institutions.

This allocation stands out due to its size, representing a significantly larger percentage of assets compared to recent Bitcoin investments by pension funds abroad. For instance, the State of Wisconsin’s pension fund allocated only 0.1% of its assets to Bitcoin.

Cartwright anticipates that this pioneering move will set a precedent for other UK institutional investors. The firm draws parallels between the current adoption of Bitcoin and the gradual embrace of equities by pension funds in the 1970s. The expectation is that, over time, excluding Bitcoin from investment portfolios could be viewed as a strategic oversight.

This development reflects a broader trend of institutional adoption of cryptocurrencies, particularly in the wake of the approval of spot Bitcoin ETFs earlier this year. Financial giants like BlackRock and Fidelity have launched such funds, collectively managing over one million Bitcoins, valued at approximately $67 billion at current market prices.

The UK’s Financial Conduct Authority (FCA) continues to oversee and regulate cryptocurrency investments, ensuring that such pioneering moves align with existing financial regulations and standards.

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