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German Crypto Law Allowing Special Funds to Hold Digital Assets Takes Effect Today

UTC by Steve Muchoki · 3 min read
German Crypto Law Allowing Special Funds to Hold Digital Assets Takes Effect Today
Photo: Shutterstock

Germany embarked on a journey to regulate and adopt the crypto industry and blockchain technology back in 2019.

A new law that allows institutional investors in Germany to tap crypto assets is set to take effect as of Monday, August 2, 2021. Almost half a trillion dollars is expected to be channeled into the crypto industry. Notably, over 4,000 German institutional investors with over $2.1 trillion can put up to 20% of their funds into the crypto market from Monday onwards thanks to a new law.

However, due to high crypto volatility, most institutional investors in Germany are likely to take time before hopping into the market. According to a spokeswoman from Deutsche Bank AG’s asset manager DWS group said that they are monitoring the crypto market and the events unfolding. DekaBank, Germany’s prominent asset manager, noted that they are monitoring the situation and have been eyeing the crypto industry long enough.

Although the new crypto law by Germany sets the limit to 20% of institutional funds, Tim Kreutzmann, an expert on crypto-assets at BVI, has expressed doubts on whether most institutions will even come close to the figure.

“On 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,” Kreutzmann noted.

Despite it all, the move by German lawmakers to allow institutional investors to delve into the crypto market is expected to play a critical role in Europe. Moreover, Germany is a major economic hub for both the European Union and also the global economy. Ultimately, the move could act as a catalyst for other nations to follow the same path in the foreseeable future.

Bigger Picture on German Crypto Law

The cryptocurrency industry has grown to a trillion-dollar market in the past few months. Led by the mother coin, Bitcoin, followed by Ethereum, the DeFi hub, big money from institutional investors has proliferated in the first half of the year, 2021.

Germany embarked on a journey to regulate and adopt the crypto industry and blockchain technology back in 2019. Notably, the comprehensive measures are set to be realized by the end of this year.

A domino effect could kick in should the strategy deem successful in the near future. Perhaps the regulators could eliminate the set limit while other funds follow suit in the near future.

Furthermore, the crypto industry has been tested rigorously in the past decade. Moreso during the coronavirus pandemic when most stock markets crashed and took time to recover. Bitcoin’s versatility has made it favorable among most investors who seek a better store of value assets.

The crypto market led by Bitcoin has significantly rebounded from the prior dip and might be headed for a new ATH.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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