The plunge in prices for Bitcoin and other cryptocurrencies in recent weeks provides a cautionary tale for the handful of public pension funds that have dipped their toes in the crypto pool over the past few years. Most have done it indirectly through stocks or investment funds that serve as proxies for the larger crypto market. A lack of transparency makes it difficult to tell whether they’ve made or lost money, let alone how much, and for the most part fund officials won’t say.

But the recent crypto meltdown has prompted a larger question: For pension funds that ensure teachers, firefighters, police and other public workers receive guaranteed benefits in retirement after public service, is any amount of crypto investment too risky?

Many public pension funds across the U.S. are underfunded, sometimes seriously so, which leads them to take risks to try to catch up. That doesn’t always work out, and the risk extends not just to the funds but to taxpayers who might have to bail them out, either through higher taxes or diverting spending away from other needs.

Keith Brainard, research director for the National Association of State Retirement Administrators, said he wasn’t aware of more than a handful of public pension funds that have invested in crypto.

“There may come a day when crypto settles down and becomes adequately understood and mature as a potential investment that public pension funds might embrace them,” Brainard said. “I’m just not sure that we’re there yet.”

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