Germany allows institutional funds to invest in crypto assets

German funds for institutional clients will be able to invest up to 20% of assets in cryptocurrencies from July 1. This will be possible after the new legislation comes into force, according to Decrypt.

Experts say the implementation of the initiative will strengthen Germany’s position as an investment hub and mark a significant milestone in the adoption of digital assets.

On 22 April the Bundestag approved the respective bill. It will take effect after approval by the Federal Council of Germany. The provisions apply to closed investment funds for institutional clients (Spezialfonds) with a volume of at least €10 million, insurers and pension funds.

Spezialfonds attract institutional investors with flexible liquidity, diversification, and leverage requirements, while the regulatory framework provides the necessary guarantees.

“That’s a hell of a lot. Spezialfonds currently stand at about €1.2 trillion ($1.8 trillion). Crypto purchases won’t happen overnight, but this is the largest pool of investment capital in Germany,”— said Sven Hildebrandt, CEO of Distributed Ledger Consulting.

According to Hildebrandt, who spoke as one of the law’s advocates, Spezialfonds could invest in cryptocurrencies up to €350 billion ($422 billion). For comparison, the current market capitalization stands at $2.16 trillion, according to CoinGecko.

In March 2020, BaFin classified digital assets as financial instruments.

Earlier, the German government passed a law allowing banks to buy and sell cryptocurrencies.

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