Germany opens crypto floodgates: Spezialfonds can hold $415B worth of crypto

Recession hits Germany after GDP declines for second consecutive quarter

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TL;DR Breakdown

  • New German crypto law aims to spur $415 billion worth of cryptocurrency investments in Spezialfonds
  • “Spezialfonds,” or special funds can now hold 20 percent in crypto assets
  • Crypto friendly policy will propel Germany as top European financial powerhouse

German crypto law all set to bring in massive changes

The German parliament, Bundestag, just gave its approval to ‘Fund Location Act’ that allows ‘spezialfonds’ to hold up to 20 percent of their portfolio in cryptocurrency assets. Spezialfonds or ‘Special Funds’ are premier German funds known for their large size and mass appeal. They can now hold 20 percent of their asset portfolio in cryptocurrencies, which currently amounts to approximately $415 billion.

Germany being Europe’s economic and industrial powerhouse, will undoubtedly reap significant benefits courtesy of the new Fund Location Act. Major German funds now have the option to diversify their portfolio with BTC, and more altcoins.

Germany’s crypto-friendly legislation to benefit 4,000 Spezialfonds

The Fund Location Act was first bought in April 2021, and subsequently passed in the Bundestag. Theoretically speaking, if each Spezialfond prefers to buy 20 percent crypto, they would cumulatively amount to $415 billion worth of crypto purchase.

Chief executive officer of Distributed Ledger Consulting, Sven Hildebrandt, cited the $415 billion estimate in a German newspaper. The fiscal implications of such a colossal cryptocurrency investment by large German institutional investors are massive, especially during the current stagnation phase in the crypto realm.

Hildebrandt believes that interest amongst Spezialfonds will explode going further. It could open up the floodgates of massive crypto investments in the nation. Of course, the first choice will be Bitcoin followed by other crypto assets.

‘Damn Huge’ – Crypto market readies itself for a German clean sweep

Spezialfonds are a big thing in Germany. Currently, about 4,000 Spezialfonds represent roughly $2.2 trillion in value. In comparison, the United States does not have any equivalent to these German funds.

Spezialfonds are seen in high regard by German investors as they provide superior flexibility, high liquidity, fewer borrowing limitations, and asset diversification. The robust German regulatory framework is a cherry on the cake for investors.

The new act has got a thumbs up from Germany’s Bundesverband Alternative Investments (BAI). The agency has also advocated that similar laws be introduced for public funds as well.

Such crypto-friendly policies are sure to enhance Germany’s rank as Europe’s financial hub. Hildebrandt commented that it would also give a fillip to the local blockchain and cryptocurrency industry.

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Gurpreet Thind

Gurpreet Thind is pursuing Masters in Electrical Engineering at University of Ottawa. His scholarly interests include IT, computer languages and cryptocurrencies. With a special interest in blockchain powered architectures, he seeks to explore the societal impact of digital currencies as finance of the future. He is passionate about learning new languages, cultures and social media.

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