German institutional funds now have the option to invest 20% of their portfolio in crypto

Some German institutional funds will now be allowed to keep up 20% of their digital assets under the new law. This is because there has been a growing demand for this industry from many institutions.

Bloomberg reported that Spezialfonds, Germany’s fixed-term investment fund, will soon be able to give 20% of their shares to digital assets. These funds are estimated to manage around 1.8 trillion euros, or $2.1 trillion. They can only be accessed by local institutional investors like pension companies or insurers.

Tim Kreutzmann, a BVI cryptocurrency expert, stated that most funds would prefer to start with small amounts of money .

Most funds will initially remain below the 20% limit. On the one hand, institutional investors, such as insurers, have strict regulatory requirements for their investment strategies. And on the other hand, they also need to want to invest in cryptocurrencies.

Kamil Kaczmarski from Oliver Wyman LLC is also expecting this tentative approach. He believes funds can experiment with cryptocurrencies in lower levels than 20% for at least five years.

Kaczmarski also noted that Germans might be cautious due to the volatile price swings of cryptocurrency. Since 1923, when hyperinflation hit their postwar economy, Germans have been conservative in financial matters.

BaFin, Germany’s financial regulator allowed some german institutional funds to start holding cryptocurrency earlier this month.

The financial watchdog has before expressed concern about crypto’s volatile and risky nature. This latest development aims to prove that the regulator still wants to foster the future growth and use of emerging financial technology.

Read Also: Ireland Gets A Major Crypto Push From PayPal

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