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Nearly 4,000 German institutional funds can now allocate 20% to crypto

Nearly 4,000 German institutional funds can now allocate 20% to crypto
Justinas
Baltrusaitis
4 weeks ago
2 mins read

A new law in Germany now allows the almost 4,000 institutional funds accounting for about €2 trillion in assets under management to invest 20% of their portfolios in bitcoin and other cryptocurrencies.

The Fund Location Act (Fondsstandortgesetz) law went into effect on July 1 after the German federal parliament, the Bundestag, cleared it for legislation on April 22.

The law could potentially lead to an influx of institutional crypto investors into Germany, which enjoys one of the strongest economies in the eurozone. The law targets the country’s new and existing special funds or Spezialfonds.

“All crypto values can be acquired by open-ended special funds with fixed investment conditions, up to 20% of the fund’s NAV. From an investment tax perspective, crypto assets will also be included in the investment catalogue of special investment funds with a corresponding 20% limit. Furthermore, open-ended special funds with fixed investment conditions may also invest – without any quantitative limit – in infrastructure project companies,” the law reads in part.

The new law’s potential impact on crypto space 

A report by BVI Investments estimates that $2.23 trillion were invested in open special funds. The amount excludes special real estate funds as of December 2020. In this case, an allocation of 20% in cryptocurrencies for all the special funds would equate to over €376 billion. 

Increased interest in cryptocurrencies in jurisdictions like Germany has resulted in increased regulatory activity. Recently, the country’s regulator BaFin permitted crypto exchange Coinbase to operate in Germany under revised regulations.  

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Justinas Baltrusaitis
Author

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.