Institutional Funds are Now Allocated to Crypto Investments in Germany

Kavya  |  Jul 9, 2021

German authorities have loosened restrictions on cryptocurrency investments. Crypto investments now account for up to one-fifth of institutional capital. Some asset managers continue to advise caution when dealing with digital assets and other hazardous cryptos. German regulators continue to keep a close watch on such developments.

Investors Allocate Institutional Funds To Crypto Investments In Germany

The new restrictions went into force at the start of the month. They are in line with Germany's Federal Financial Supervisory Authority's (BaFin) efforts to soften its position on cryptocurrency investments. 

Previously, the financial watchdog expressed worry about the crypto market's hazardous and unpredictable character. This recent development shows that the regulator is still interested in encouraging the future growth of innovative financial technologies.

In Germany, assets held in specialist funds termed as Spezialfonds are subject to the new restrictions. These funds are available only to institutional investors and not to the public.

According to the BVI, Germany's trade association, this asset class was valued at about two trillion euros in the first quarter of the year.

With the possibility of converting this money into crypto assets, billions of euros might shift into the crypto market. Authorities, officials, and representatives continue to be wary of the ever-changing crypto landscape.

Klaus Stiefermann, General Director of a German organization for corporate pension plans believes, firms handling such pension systems "would act with extreme caution when analyzing cryptocurrencies."

Germany's Crypto-Friendly Trends Continue

Introducing the new fund allocation regulations follows Coinbase's other significant announcement at the end of last month. The crypto exchange behemoth has finally received approval to legalize Bitcoin custody services in Germany.

BaFin gave Coinbase the first cryptocurrency custody license.

Germany has also made several steps that are favorable to the country's future blockchain growth. Very few high school graduates will have their certificates issued using blockchain technology.

German legislators last month approved the issuance of blockchain-backed debt securities. While the country's politicians may remain cautious, these cryptocurrencies and blockchain advancements are measures to keep Germany a worldwide leader in innovation.

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