Germany to Permit Institutional Funds to Invest Billions in Crypto Assets for the First Time
Brian Njuguna Aug 02, 2021 08:50
The German administration is set to green-light legislation on Monday, which will permit institutional funds to invest as much as 20% in crypto assets like Bitcoin.
The German administration is set to green-light legislation on Monday (August 2), which will permit institutional funds to invest as much as 20% in crypto assets like Bitcoin (BTC). This will be a significant step forward for the crypto space because it has never happened on German soil.
A boost to institutional investors
As per the announcement:
“A law taking effect on Monday will let so-called Spezialfonds with fixed investment rules put as much as 20% of their holdings in Bitcoin and other crypto assets. The funds, which can only be accessed by institutional investors such as pension companies and insurers, currently manage about 1.8 trillion euros ($2.1 trillion).”
Lawmakers across the globe have been giving crypto assets the cold shoulder. Therefore, this move by German legislatures marks a shift that will provide institutional investors with a boost.
Kamil Kaczmarski, a financial services adviser at Oliver Wyman LLC, expects the institutional funds to experiment with cryptocurrencies at a low level based on factors like volatility.
Eyeing crypto-investments
According to Tim Kreutzmann, a crypto expert at BVI:
“Institutional investors such as insurers have strict regulatory requirements for their investment strategies. On the other hand, they must also want to invest in crypto.”
Investment in the crypto ecosystem has emerged to be lucrative for various institutional investors. For instance, MicroStrategy, a leading business intelligence company, is not relenting in its quest to invest in the Bitcoin market amid holding 105,085 BTCs. The firm recently released its financial report for the second quarter of 2021 and stressed its commitment to deploy funds to invest in its "digital asset strategy."
On the other hand, payment giant PayPal announced its intention to launch a crypto wallet in the third quarter this year.
Jan Wuestenfeld, an on-chain analyst, recently noted that a negative correlation between the dollar index (DXY) and Bitcoin could signal a return of institutional money in the BTC market.
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