Germany Institutional Funds can now invest 20% of portfolios in crypto assets

Germany Institutional Funds can now invest 20% of portfolios in crypto assets

A German law that takes effect next Monday will allow so-called “Spezialfonds” with fixed investment rules to invest up to 20% of their assets in bitcoin and other crypto assets. 

Before this, Germany passed a “crypto-friendly” law called the Fund Location Act, which implies all specialized investment funds can invest up to 20% of their USD 2 trillion assets in cryptocurrency. It also applies to new Spezialfonds set up by institutional investors such as financial institutions, insurance companies and pension funds.

Lawmakers worldwide have been slow to accept crypto assets, whose valuations have whipsawed and whose markets are dominated by a small number of investors. 

The move marks a shift of the crypto asset into the mainstream and follows investments by some of the biggest names in the finance industry, including Mike Novogratz and Alan Howard.

Deutsche Bank AG’s asset manager DWS Group is monitoring developments but is not currently planning to offer any funds that buy crypto, according to a spokeswoman. DekaBank, one of the country’s biggest asset managers, has been considering investing in digital currencies but hasn’t made a decision yet, a spokesman said.

Germany’s current crypto regulators state that all German residents and institutions are permitted to buy, sell and hold cryptocurrencies, as long as it is done through a BaFin licensed exchange. According to FXLeaders, a big allocation of crypto to this market could result in significant developments across Europe, since Germany holds the biggest economy among the European countries.

It has to be noted that though the EU was among the initial countries to make cryptocurrency legal across the continent, there is no specific regulation by the European Union that governs crypto activities. 

Damon Harrison
Market Analyst, IPG Group