Germany has approved a new jurisprudence that would allow over 4,000 institutional investment funds to hold up to 20% in crypto assets.
As of Monday, a law will allow Spezialfonds (special funds) with fixed investment rules, access to digital assets. The firms can now allocate up to 20 percent of their portfolios in crypto assets, according to a Bloomberg report.
The funds currently manage about 1.8 trillion euros ($2.1 trillion). Institutional investors such as pension companies and insurers are the only one who can access these funds.
Lawmakers worldwide have been slow to accept crypto assets, whose valuations have whipsawed and whose markets are dominated by a small number of investors. The move marks a shift of the asset class into the mainstream. It would also follow investments by some of the biggest names in finance industry, including Mike Novogratz and Alan Howard.
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“Most funds will initially stay well below the 20% mark,” said Tim Kreutzmann,crypto-assets expert, BVI, Germany’s fund industry body. “On the one hand, institutional investors such as insurers have strict regulatory requirements for their investment strategies. And on the other hand, they must also want to invest in crypto.
The volatility of the assets might not be attractive to conservative investors in Germany, according to Kamil Kaczmarski, a financial services adviser at Oliver Wyman. He expects funds to experiment with cryptocurrencies at a low level, with most of them not getting close to the threshold for at least five years.
