- Institutional investor focussed Spezialfonds hold $2 trillion worth of assets
- Germany’s financial watchdog BaFin open to encouraging new technologies in the country’s financial markets space
- The potential inflow of billions of euros from these funds into crypto markets quite possible
JAIPUR (Coinchapter.com) – Institutional funds in Germany have received the green light to allocate 20% of their assets in Bitcoin and crypto markets. There are about 4000 such funds that cater to institutional investors in the country. Also known as ‘Spezialfonds,’ they collectively hold 2 trillion euros worth of assets.
Germany’s lawmaking body Bundestag introduced the Fund Location Act in April 2021. And the decision to allow Spezialfonds to carry on with crypto market exposure is a direct consequence of this act.
The go-ahead implies a potential infusion of 400 billion euros worth of funds into cryptocurrency markets. German regulator BaFin’s move above was welcomed by digital asset advocates/market participants.
Developing Finance Through Technology
As per a report published in Financial Times, BaFin intends to tone down its skepticism regarding the nascent but rapidly rising crypto asset class. And allow the infusion of avant-garde technologies in the financial space to foster the development of new financial frontiers.
German lawmakers seek to transform the financial sector in the country radically. The change in allocation rules is a part of the technology-centric initiatives that intend to redefine financial markets in Germany.
According to a comment by German law professional Angelo Lercara that FT quoted in its report, “BaFin has been very active in issuing guidance and has gained a reputation internationally as a regulator that understands both crypto assets and distributed ledger technologies.”
Germany Going Heavy On Crypto
From what it appears, Europe’s largest economy intends to become the center for “all-things crypto” in the continent. For example, just last month BaFin, allowed US-based cryptocurrency exchange heavyweight to operate crypto custody and trading platforms in Germany.
The company’s largest stock exchange operator, Deutsche Börse, recently purchased a majority stake in Crypto Finance. Also, the company initiated efforts to enable banks and hedge funds to leverage legit and recognized platforms for trading crypto assets.
Author and Frankfurt School Blockchain Center Professor Philip Sandner feels that more companies will the German stock exchange’s course. “…In the years to come, more licenses will be applied for in the area of digital assets, custody, etc. – regulatory regimes are being developed (AML5 and eWP in Germany, MiCA in Europe)”, he said on Twitter.