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Germany permits institutional funds to invest in crypto assets

Published 07/08/2021, 11:13 PM
Updated 07/08/2021, 11:30 PM
Germany permits institutional funds to invest in crypto assets

According to new policies from German regulators, institutional funds can now invest in cryptocurrencies.

The new law, which was implemented at the beginning of the month, gives the German Spezial-AIF special funds the right to invest in digital assets. The regulation specifically applies to assets held in the specialized funds called Spezialfonds.

Traditionally these special funds are open-ended, regulated investment funds limited to institutional investors, such as financial institutions, insurance companies, corporations, foundations, and churches, excluding the general population.

Around 4,000 institutional funds with almost 2 trillion Euros in assets under management in Germany can now invest 20% of their portfolios in cryptocurrency. At the moment the regulations allow investments only in Bitcoin and Ethereum. However, it can be assumed that with time things will change.

With the potential of these funds to be converted into crypto assets, billions of Euros could shift into the crypto market.

Germany appears to be gearing up to become the next hub for cryptocurrency. Recall that the country’s Financial Supervisory Authority (BaFin) issued a crypto custody license to Coinbase late last month. Despite the seemingly, pro-crypto stance, regulators appear to still have hesitations towards the ever-shifting crypto space. Big investors are expected to move ‘cautiously’ given risks surrounding the asset class.

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