Key Takeaways
- • More than $6bn (£4.4bn) was reportedly stolen from Binance, the crypto trading exchange, in a heist that took place in late October, according to Pensions Expert.
- • Binance has pledged to reimburse all affected users, but the incident has refocused institutional attention on custody and cybersecurity risk in digital assets.
- • Direct exposure for UK pension schemes appears limited, as only one unnamed UK pension fund is known to hold bitcoin, placed through consultant Cartwright in November 2024.
- • An EY-Parthenon survey of 317 investors found 73% planned to increase digital asset exposure, while 66% cited custody as a growing concern.
- • Industry advisers Cartwright and Arche Capital argue the hack exposed a custody arrangement rather than an asset class, recommending segregated, verifiable custody and regulated wrappers.
Summary
More than $6bn (£4.4bn) was stolen from Binance, a crypto trading exchange, in a large heist that took place in late October. The platform has pledged to reimburse all affected users. The incident has focused attention on cybersecurity and the investment case for crypto assets, particularly among institutional investors that may be considering allocations.
For pension schemes, the direct impact is likely limited, as there are almost no schemes known to invest in bitcoin or other cryptocurrencies traded on the Binance platform. In the UK, just one unnamed pension fund is known to have invested in bitcoin, according to its investment consultant Cartwright, which helped the scheme make a long-term allocation in November 2024. Sam Roberts, director of investment consulting at Cartwright, said the incident was a lesson in how assets are held. He said that for direct bitcoin holdings, institutions should use exchanges to trade rather than to hold, and should keep assets in offline cold custody, in the investor's own name and separate from the custodian's balance sheet, with signing authority spread so no single party can act alone.
The broader institutional picture remains constructive but more cautious. A recent global survey by EY-Parthenon of 317 investors found that 73% planned to increase exposure to digital assets, including crypto, while 66% cited custody of digital assets as an area of increasing concern. EY-Parthenon described a "tonal shift" in investor approach over the past couple of years, with custody emerging as a "gating factor". Price volatility has also pushed investors toward greater emphasis on risk management and governance.
Vanessa Grellet, managing partner at technology investment house Arche Capital, said the Binance hack was a lesson in how to gain exposure to digital assets rather than a reason to avoid them. She noted that UK pension funds and other institutions rarely hold crypto through exchange accounts, instead gaining exposure through regulated instruments such as exchange-traded products and listed futures held with qualified custodians. For institutions considering an allocation, she advised asking who holds the underlying assets, how they are segregated, and what insurance and proof-of-reserves standards apply. Roberts summarized the view that Bitcoin will not suit every pension scheme, but that what was compromised at Binance was a custody arrangement, not an asset class.
For pension schemes, the direct impact is likely limited, as there are almost no schemes known to invest in bitcoin or other cryptocurrencies traded on the Binance platform. In the UK, just one unnamed pension fund is known to have invested in bitcoin, according to its investment consultant Cartwright, which helped the scheme make a long-term allocation in November 2024. Sam Roberts, director of investment consulting at Cartwright, said the incident was a lesson in how assets are held. He said that for direct bitcoin holdings, institutions should use exchanges to trade rather than to hold, and should keep assets in offline cold custody, in the investor's own name and separate from the custodian's balance sheet, with signing authority spread so no single party can act alone.
The broader institutional picture remains constructive but more cautious. A recent global survey by EY-Parthenon of 317 investors found that 73% planned to increase exposure to digital assets, including crypto, while 66% cited custody of digital assets as an area of increasing concern. EY-Parthenon described a "tonal shift" in investor approach over the past couple of years, with custody emerging as a "gating factor". Price volatility has also pushed investors toward greater emphasis on risk management and governance.
Vanessa Grellet, managing partner at technology investment house Arche Capital, said the Binance hack was a lesson in how to gain exposure to digital assets rather than a reason to avoid them. She noted that UK pension funds and other institutions rarely hold crypto through exchange accounts, instead gaining exposure through regulated instruments such as exchange-traded products and listed futures held with qualified custodians. For institutions considering an allocation, she advised asking who holds the underlying assets, how they are segregated, and what insurance and proof-of-reserves standards apply. Roberts summarized the view that Bitcoin will not suit every pension scheme, but that what was compromised at Binance was a custody arrangement, not an asset class.
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