As the capability to invest in crypto becomes increasingly complicated, with many nations either actively supporting it or doing everything possible to make sure that it does not happen, it now looks like Germany shall be allowing crypto investments to take place as early as this Thursday. Therefore, a maximum of €350 billion may begin entering the cryptocurrency market by tomorrow.
This is all part of the new Fondsstandortgesetz (Fund Location Act), which will enable 4,000 pre-existing special funds, also referred to locally as spezialfonds, to be able to be invested in both Bitcoin (BTC) and Ethereum (ETH). Additionally, some new special funds will also be included.
Funds can now be used for crypto
In the past, the usage of such funds for the purposes of crypto-based investments had been prohibited by the local government. No amount of funds was permitted to be allocated for any percentage of any cryptocurrency. Now though, the whopping amount of €1.87 trillion (estimated) may now be diversified into various cryptocurrencies such as Bitcoin.
There is now the freedom of choice regarding how much of an investment may be made into crypto, with a maximum of the investments being 20%. This law is the latest implementation by a directive from the European Union, which would imply that similar laws may be administered throughout the rest of Europe before long.
Distributed Ledger Consulting’s CEO, Sven Hildebrandt, had stated that no meaningful change would occur overnight. However, there is the potential for a large-scale investment as Germany possesses the biggest investment vehicle, and so the money is already in there. Sven had contributed towards implementing the aforementioned new law.
Spezialfonds
The law, while certainly benefitting the crypto industry, has a much wider as well as greater general applicability in the practical sense as it is not entirely cryptocurrency specific in the context of granting mainly insurance and pension funds. Much like the spezialfonds, there is thus the much-needed ability and desire to diversify.
Blockchain Capital’s Jacqueline Winter had stated that it is important to consider these spezialfonds as the primary institutional fund vehicle for Germany, to be used for those asset classes which tend to be the most liquid. Any property present within specific structures will also be included, she added.
Lastly, the restriction for any public funds shall nonetheless remain intact for now, with the nation’s BAI organization requesting for these funds to be included as well in the near future.