German Law Allowing Institutions to Own Crypto Goes into Effect August 2, 2021 – August 2, 2021, German institutional funds will be able to hold up to 20% of their assets in cryptocurrencies, possibly setting the stage for mainstream acceptance of Bitcoin (BTC) and other crypto assets by the country’s pension funds.
As Bloomberg reports, the new law changes the fixed investment rules governing Spezialfonds, also known as special funds, which are only accessible to institutional investors such as pension funds and insurance companies. Spezialfonds currently manages assets worth about $2.1 trillion, or 1.8 trillion euros.
Tim Kreutzmann, who works for the German investment fund association BVI, told Bloomberg that most funds will likely stay well below the 20% mark initially, explaining:
“On the one hand, institutional investors such as insurance companies have strict regulatory requirements for their investment strategies. And on the other hand, they must also want to invest in crypto.”
The new rules, which were passed in early July, represent an important evolution in the way German lawmakers regulate digital assets. Germany’s Federal Financial Supervisory Authority, better known as BaFin, continues to urge caution when it comes to investing in digital assets. At the same time, financial watchdogs are driving blockchain innovation in the country.
Germany first embarked on a comprehensive blockchain strategy in 2021, promoting 44 adoption steps to be realized by the end of 2021. The new approach to blockchain and crypto is also introducing measures that will make it easier for investors to access digital investments.
The country has also become a leading market for cryptocurrency exchange-traded products, or ETPs. As Cointelegraph reports, investment product publisher 21Shares has partnered with German brokerage comdirect to provide crypto-focused ETPs to nearly 3 million customers.