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Up to $435 Billion Could Flow into Crypto as New Legislation is Approved in Germany
Updated regulations around crypto investments in Germany could lead to a US$435 billion inflow to the crypto economy from German institutional funds.
The new Fund Location Act (Fondsstandortgesetz) comes into play from July 1, pending a final decision by the German Bundesrat (Federal Council).
Big Investment Managers Can Now Invest 20% in Crypto
The new act allows existing German special funds (Spezialfonds) to invest up to 20 percent of their portfolios in Bitcoin (BTC) and Ethereum (ETH). Before this new regulation was passed, these funds were prohibited to invest in crypto.
Spezialfonds are considered the German institutional fund vehicle of choice for most liquid asset classes, and for property within distinct structures.
Jacqueline Winter, Blockchain Capital
Sven Hildebrandt, CEO of Germany-based Distributed Ledger Consulting (DLC), said there could be a theoretical inflow potential for crypto assets in the order of US$435 billion.
This won’t happen overnight, but we are talking about the largest investment vehicle that we have in Germany – literally all the money is in there.
Sven Hildebrandt, Distributed Ledger Consulting
This amounts to around 20 percent of the estimated assets under management of these wealth and institutional investment fund managers. Their 4,000 open-end domestic special funds currently have an estimated €1.87 trillion tied up, some of which could flow into crypto. This legislation being passed by one of the economic powerhouses of the world could spell good news for wider institutional acceptance.
Coinbase Crypto Services Approved in Germany
According to a report, Coinbase has recently secured a Federal Financial Supervisory Authority (BaFin) licence to conduct business in Germany.
The Nasdaq-listed company holds the first licence issued by BaFin for crypto custody and trading, which is now legally seen as a financial service in Germany.
In an attempt to combat money laundering and fraud, the German government has issued new regulations that require a licence to deal with digital assets. Coinbase can now legally conduct business in Germany and Japan and could open the doors for new investors.
Coinbase Germany will launch in coming weeks to serve both new and existing German customers more effectively, including by localising our service and increasing our product offering.
Coinbase Germany press release
Will we see the German giants put up a fight against the various other institutional powerhouses across the globe? Watch this space …
Author
Robert Drage
Robert is a freelance researcher, with a background in information science currently interested in blockchain technology and technical developments in the field.
