The vast majority (98 per cent) of pension funds are developing a strategy about how to invest in stablecoins and what to use them for, including 44 per cent of pension funds that already have a strategy in place, research from Brava Finance has found.

The survey, which gathered views from across the US, UK, UAE, EU, Brazil, Singapore, South Korea, Switzerland and Hong Kong, also found that the majority (86 per cent) of pension funds that are already investing in digital assets say they have a good or better understanding of stablecoins.

According to the survey, just over a tenth (12 per cent) of pension funds had "excellent" knowledge of stablecoins, which are a digital asset used for making payments or within investment strategies.

The majority looking to make use of stablecoins was due to a desire to gain access to decentralised finance (DeFi) opportunities, cited by 78 per cent of pension funds.

Other primary uses include portfolio diversification (70 per cent), parking funds in volatile markets (62 per cent), fast, low-cost transactions (54 per cent), and generating yields from lending protocols (36 per cent).

Interest in this asset is also set to increase, as 80 per cent of pension funds questioned said that they think institutional investors' use of stablecoins will increase over the next three years, with 8 per cent of those expecting that it will increase dramatically.

Use of stablecoins for investment diversification is set to see a particular increase, as when asked how much institutional investors’ use of stablecoins will change over the next three years, 90 per cent said use for investment diversification will increase, with 60 per cent suggesting it will increase dramatically.

However, this anticipated increase is also expected across all other categories, including accessing DeFI (88 per cent), fast and low transaction costs (88 per cent), parking of funds (84 per cent) and investing for yield (84 per cent).

Commenting on the findings, Brava Finance founder and CEO, Graham Cooke, said: “Pension funds have identified that digital assets such as stablecoins offer them both strategic and tactical opportunities within decentralised finance.

“They are now seeking to build digital asset strategies that will help them streamline and remove friction and costs from some of their processes to deliver a diversified source of yield and improve risk-adjusted returns for their clients.”

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