New German crypto institutional investment rules will ‘open the gates’

Written by Adam Cadle

05/08/2021

New German rules on institutional investment in crypto assets will ‘open the gates’ for mass adoption of the asset class, Global Digital Finance (GDF) has said.

Under the new German law, which came into effect on 2 August, Spezialfonds – also known as special funds – can hold up to 20% of their assets in cryptocurrencies paving the way for increased investment by insurers and pension funds in Germany.

Analysts are predicting the move could mean up to $400bn of crypto investment by Spezialfonds which currently hold more than $2.1trn of assets. GDF expects other regulators to follow suit and said a consultation paper from the Bank for International Settlements is already providing confidence for financial institutions to invest in crypto and has set out a potential framework.

GDF director of regulatory affairs EMEA Lavan Thasarathakumar said: “Increased institutional investment into cryptoassets will pave the way for new products and services to be produced and for more innovative solutions that can take the crypto industry on to a new plain and deliver on some of the benefits that it has promised.

“The key component of the law is that it sets clear guidelines under which financial institutions will be expected to invest in cryptoassets. This gives confidence and a mandate for institutions to be able to invest money into crypto.”

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