On July 1, a new law will come into force in Germany, allowing off-budget funds to invest in crypto assets. Institutional investors prefer such funds and the demand for them is growing.
The German parliament passed a law allowing managers of the most popular institutional investment funds – so-called off-budget funds – to allocate 20% for investments in crypto assets. The move has been described as a major strengthening of Germany’s position as a center for financial investment, and experts believe it will contribute to the development of the cryptocurrency industry as a whole by further legitimizing the asset class.
“The addition of cryptoassets to off-budget funds is an important step for their adoption,” said German parliamentarian Frank Schäffler. “The law is moving in the right direction here, and we definitely welcome that.”
The law was approved by the German federal parliament – the Bundestag, and in the near future it should be approved by the Federal Council of the country. The law will apply to both existing special funds and new ones created by institutional investors such as financial institutions, insurance companies and pension funds.
In total, about 4,000 existing investment funds will now be eligible to invest in BTC and other crypto assets, said Sven Hildebrandt, CEO of the German company Distributed Ledger Consulting (DLC). He noted:
“It is very important. About 1.2 trillion euros is invested in extra-budgetary funds that have fixed investment conditions, and “right now 0% of this money is invested in cryptocurrencies because it is simply prohibited.”
Hildebrandt has been lobbying for the renewal of legislation in this area for more than two years. If special funds, with the exception of those dedicated exclusively to physical assets, decide to invest even 1% of their money in cryptocurrency, the impact on the industry will be enormous.
“It won’t happen overnight, but we’re talking about the largest investment vehicle in Germany – literally all the money is there,” Hildebrandt said. According to him, theoretically, up to 350 billion euros can enter the cryptocurrency market only from special funds.
Recall that last December, Germany was allowed to register electronic securities on the blockchain. Recently, the German Federal Agency for Financial Supervision (BaFin) issued an official warning about Binance’s “suspicion of violating” German securities regulation laws.
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