Why Bitcoin might belong in pensions

Is Bitcoin finally worth including in pension portfolios?

Alyse Killeen certainly thinks so. She argues that Bitcoin has reached the level of maturity necessary to be considered a viable asset for pension funds and institutional portfolios. She draws a clear distinction between Bitcoin and the broader crypto market.

“Crypto and Bitcoin are two separate forms of innovation, and we believe that Bitcoin has uniquely met the high bar that’s required to be in a pension portfolio,” she said.

Killeen, founder and managing partner of Stillmark, the first Bitcoin-focused venture capital firm, has been in the crypto and Bitcoin ecosystem since 2013. She sees institutional engagement today as a reflection of the asset’s evolution. Additionally, she believes that Bitcoin, unlike the broader crypto space, now has the consistency and security required by pension boards.

“Bitcoin uniquely has never been hacked. Bitcoin’s monetary policy has been consistent. Someone can buy Bitcoin or allocate capital to Bitcoin and then walk away for a decade and find that their capital is there, managed by the same rules of the system,” she said.

She also noted growing adoption at the corporate level, acknowledging the more than 70 publicly traded companies, excluding MicroStrategy, that now hold over $140,000 BTC on their balance sheets. She attributes this trend to Bitcoin’s “truly decentralized” governance model.

“The rules cannot be changed, which prevents the sort of fraud that mature institutional players worry about when they’re looking into new allocations,” she said.

As for whether the recent Bybit hack could cause hesitation among institutional investors, she explained the incident, which involved Ethereum, was enabled by the complexity of Ethereum’s programming language.

It was ultimately a sophisticated social engineering attack that exploited operational security gaps where hackers compromised a developer machine linked to Safe, a multisig wallet provider, gaining access to its AWS environment and injecting malicious JavaScript into its user interface. This code manipulated transaction displays, tricking users into approving transfers to attacker-controlled wallets.

Contrastingly, Bitcoin deliberately avoids that level of complexity, she noted.

“Bitcoin has purposely been designed and maintained to keep things simple, so that the surface area for attack is reduced,” explained Killeen. “As you add complexity to software, the surface area for attack becomes broader and the software becomes more vulnerable.”

However, she underscored that Bitcoin’s developers prioritize system security above all else with the second priority being the design space.

Killeen’s remarks come as Bitcoin has seen overwhelming support with US Donald Trump’s administration who recently signed an Executive Order to establish a Strategic Bitcoin Reserve, with further plans to position the US as “a leader among nations in government digital asset strategy.”

She highlighted three key developments that have lowered barriers to institutional adoption in the past year: the drop in reputational risk, the evolution of accounting rules, and the development of tools that allow Bitcoin to be integrated into traditional portfolio management.

“The tools are there for professional managers and corporations to participate in Bitcoin without compromising the standards that they have for treasury or portfolio management,” she said.

While she acknowledged that crypto fraud has been a major obstacle, Killeen underscored that institutional investors are increasingly drawing the line between Bitcoin and the rest of the market. She pointed to the strong uptake of Bitcoin ETFs compared to Ethereum ETFs as an example.

“The market’s incredible reception of the Bitcoin spot ETF, and then lesser participation in the Ethereum spot ETF created curiosity that allowed folks to begin to differentiate between Bitcoin and crypto,” she said.

That divergence has shaped investor behaviour. While institutions continue to shy away from broader crypto assets, Killeen says they’re showing increasing interest in Bitcoin-based infrastructure and tools.

“We’re seeing significant interest in exposure to funds that invest in startups and towards potential acquisitions from the private market by companies, including financial institutions, that want to adopt Bitcoin technology for the sake of efficiency in their own operations,” she said.

Consequently, could pension fund allocations to Bitcoin increase beyond the typical 1 per cent to 5 per cent range? Killeen underscored allocation will grow contingent on two things.

“One is managers having a greater understanding of Bitcoin, and two is activity in the private market. The Bitcoin ecosystem provides the tools for pensions and other institutions to be able to engage with their exposure,” she said.

She sees Bitcoin’s design choices, such as its avoidance of native tokens and emphasis on equity-based startups, as critical components to the ecosystem’s durability.

“Bitcoin companies were able to grow because there was no token. It was only an equity-based company really serving their clients or customers,” she explained.

For Killeen, that’s one of the reasons Bitcoin companies are outpacing crypto startups because KPIs can allow investors “to adjust in the way they would with any other startup to find product-market fit,” she said.

While not all Bitcoin products might be a fit for pension portfolios, some, such as derivatives and yield tools, are becoming increasingly relevant to corporate treasuries looking to deploy idle capital outside of traditional banking hours.

“The opportunities for institutions in the Bitcoin ecosystem are really twofold,” she said. “The asset has matured, and Bitcoin infrastructure allows for things like access to bank-style financial tools during non-banking hours, which reduces limitations on institutions.”