Here’s how Germany can potentially see a $415B investment in crypto
Regulations around cryptocurrencies are changing all around the world. Germany, for instance, which had barred its citizens from investing in crypto, recently amended its Fund Location Act. This update has the potential to allow the allotment of as much as $415 billion for cryptocurrencies through special funds.
The law that came into effect on 1st July was introduced in April and was approved by the parliament within a short time period. It allows special funds [or “Spezialfonds”] to invest up to 20% of their portfolios in cryptocurrencies. If every “spezialfond” decides to allocate a full 20% in crypto, it would bring the total to $415 billion [or €350 billion], considering the total assets under management of such funds within the country.
The announcement noted,
“In future, it will also be possible to acquire crypto assets for open-ended special funds with fixed investment conditions, up to a maximum of 20 per cent of the fund assets.”
Spezialfonds have held a crucial position as a dominant institutional vehicle in Germany. Given its sizeable economy, this law could spur wider crypto-adoption and growth.
The country had previously allowed banks to sell and store crypto-assets starting from 1 January 2020, a development that fueled multiple partnerships between German banks and other custody providers. To keep up with the technology, German authorities followed its financial watchdog, BaFin’s decision to allow Coinbase to provide crypto-services and property trading.
This made Coinbase the first cryptocurrency exchange to receive such a license in the country. This could also allow Coinbase to expand to various other European countries and make Germany a trendsetter in the European Union.