Germany’s Federal Parliament, known as the Bundestag, has approved a new bill that will allow “Spezialfonds” to invest in cryptocurrencies and digital assets such as Bitcoin.
This week, the German Federal Parliament gave its approval to the draft “fund location law”, which will allow funds known as “Spezialfonds” to invest in cryptocurrencies, and digital assets. According to they report According to several local media, the new German law includes financial institutions, insurance companies and pension funds, which will be able to invest up to 20% of their assets under management in Bitcoin and other cryptocurrencies.
Spezialfonds are institutional investment funds, and there are around 4.000 of them in Germany, which will soon be able to diversify their portfolios and services by legally integrating cryptocurrencies.
Although the German Bundestag has already approved the bill, it still needs to be ratified by the German Federal Council before the “fund allocation law” can become effective. If the bill is ratified in the coming days, it will come into force on 1 July.
It may interest you: Digitalized securities in Germany: Federal Government promotes bill to adopt blockchain
More than $424.000 billion for Bitcoin
According to expert estimates, more than $424.250 billion (about 350.000 billion euros) could flow into Bitcoin from July 1, if the new law is ratified by the German Federal Council and the Spezialfonds are encouraged to invest in this cryptocurrency.
This would certainly be a major achievement for the crypto community at large, and a development that would undoubtedly drive the price of BTC to new heights. However, as noted by Sven Hildebrandt, CEO of the consulting firm Distributed Ledger Consulting, in a interview, this is something that will not happen overnight.
Hildebrandt says that Germany’s institutional investment funds currently manage about $1,7 trillion in assets under management – almost the same amount as the total market capitalization of all cryptocurrencies on the market, including Bitcoin. 20% of these funds invested in the world’s first cryptocurrency, BTC, would have a huge impact on the market – even if only 1% of the assets managed by the Spezialfonds were invested, Hildebrandt noted.
The expert does not rule out the possibility that the price of Bitcoin will reach new highs this year, stating that institutional investment funds are the largest investment vehicle in Germany. “Literally, all the money is there”he declared.
Germany, global financial and crypto center
The European nation is poised to become a major global financial investment hub, where cryptocurrencies and digital assets will play a major role in the future.
Germany continues to move forward in crypto-adoption, further legitimizing the new asset class that is cryptocurrencies. In early 2020, the German regulator approved a bill that allows banks to offer products and services using cryptocurrencies.
In December last year, the German bank Hauck & Aufhäuser announced the launch of an investment fund in Bitcoin, and other cryptocurrencies such as Ethereum (ETH) y Stellar (XLM) at the beginning of 2021. This fund allows professional and semi-professional investors the opportunity to invest in a diversified portfolio with the most popular cryptoassets on the market.
The Hauck & Aufhäuser assured that the creation of this fund is only “a further step towards expanding the range of services in the Asset Servicing division, to include an innovative and future-oriented component” such as cryptocurrencies and digital assets.
Investors in the country also have access to the first Bitcoin exchange-traded product (ETP), authorized by BaFin and created by the ETC Group in mid-June 2020. This ETP is listed on the German Stock Exchange's Xetra platform.
Continue reading: Bitcoin: A decentralized financial system “too important to ignore”
