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Germany recently enacted groundbreaking legislation that observers say has the potential to complement cryptocurrency investments. On July 1, 2021, the law in force since April of this year came into force, which allows selected institutional funds to allocate part of their portfolio to digital resources.

In the law targeting ‘Special Funds’,’ companies can structure their capital to include an allocation of up to 20% in cryptocurrencies. Currently, special funds manage assets worth approximately $ 2.1 trillion. And the move could have big implications for the industry.

A win for cryptocurrencies

According to analysts, the special funds will reap great rewards with the entry into force of the new law. Clemens Schuerhoff, president of Kommalpha, a financial advisory firm, says it will help companies earn $ 415 billion in new cryptocurrency investments. But that’s only if everyone maxed out their allowed allowance.

It is a thought also affirmed by Philip Pieper of the German company Defi Swarm Markets. Weighing the matter over by email, he said the development was a global victory for passionate Blockchain and cryptocurrencies. In addition, he said that the introduction of such a large pool of funds will have a profound impact on the industry.

Prudent adoption

However, the sector received the news with cautious optimism. It is agreed that it is still too early to realize the benefits of moving. While he doesn’t deny the boom that could come with the legislation, most Spezialfonds are still learning about the cryptocurrency market and still don’t consider it an investment firm.

Tim Kreutzman, a cryptocurrency expert, supports the idea that most funds will be cautious when adopting cryptocurrencies, at least in the short term. He suggested that most funds would stay below the 20% threshold. He hinted that this would stem from the need for funds to balance his regulatory obligations with his entry into the space.

Another analyst, Kital Kaczmarski of management consulting fund Oliver Wyman LLC, believes that many funds will experiment with digital assets in the next five years. y will do it at low levels, not near the threshold. He further said that traditionally conservative German investors might be put off by the volatile nature of crypto resources.

Claiming the place of Germany

DWS Group, which is Deutsche Bank AG’s asset manager, said it monitors developments. However, they had no plans to offer funds for the purchase of cryptocurrencies at the time of publication. Even at DekaBank it’s a waiting situation. firm, one of Germany’s largest wealth managers, has long considered venturing into digital currencies. But his spokesman says he has not yet decided when to do it.

Too many, the new laws are the first step in regaining Germany’s reputation as the first market for cryptocurrency trading in the EU. In the past, investors have opted for the ‘crypto valley’ of Liechtenstein and Switzerland due to the favorable tax laws of these destinations.

Wayne is a Blockchain enthusiast and cryptocurrency trading expert. Currently, he deals with trending topics in digital currencies.

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