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

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A new law in Germany now allows nearly 4,000 institutional funds representing around $ 2 trillion in assets under management to invest 20% of their portfolios in bitcoin and other cryptocurrencies.

The Fund Localization Act (Fondsstandortgesetz) entered into force on July 1 after the German federal parliament, the Bundestag, authorized it to legislate on April 22.

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

All cryptographic values ​​can be acquired by special funds with variable capital with fixed investment conditions, up to 20% of the net asset value of the fund. From an investment tax perspective, crypto assets will also be included in the investment catalog of special investment funds with a corresponding limit of 20%. In addition, special funds opened with fixed investment conditions can also invest without quantitative limit in infrastructure project companies, part of the law reads.

New laws have potential impact on the crypto space

A report from BVI Investments estimates that $ 2.23 trillion has been invested in open special funds. The amount excludes special real estate funds as of December 2020. In this case, a 20% cryptocurrency allocation for all special funds would equal over $ 376 billion.

The increased interest in cryptocurrencies in jurisdictions like Germany has led to an increase in regulatory activity. Recently, the country’s regulator BaFin allowed the crypto exchange Coinbase to operate in Germany under revised regulations.

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Author Justinas Baltrusaitis

Justin creates insightful stories based on data on finance, banking and digital assets. His reports have been cited by many influential media outlets around the world like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.

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