The so-called Fund Location Act has been in force in Germany since 1 July. Sounds bulky, but it’s bullish: this allows domestic special funds to invest up to 20 percent of their managed funds in cryptocurrencies. Experts see enormous inflow potential.
Inflows of 350 billion euros
An important crypto law has just come into force in this country: the Fund Location Act. This allows so-called special funds to invest in crypto assets such as Bitcoin, Ethereum, Binance Coin or others. This means that for the first time, numerous institutional investors in Germany will have the opportunity to allocate capital to the rapidly growing crypto industry.
Background: The Bundestag had approved the Fund Location Act on 22 April in the second and third reading, followed by the Bundesrat on 28 May 2021. The Fund Locations Act implements an EU directive that aims to simplify the cross-border distribution of investment funds through uniform rules.
Is the law in Germany the starting signal for the much-touted institutional crypto adaptation? Many assume that Bitcoin’s recent bull run, which has taken the # 1 cryptocurrency from prices at $ 5,000 to $ 65,000, has been largely driven and kept alive by institutional buyers.
According to analysts, the new law could also create huge capital inflows into the crypto industry for us. Sven Hildebrandt, for example, head of the Hamburg-based blockchain consulting company “DLC Distributed Ledger Consulting”, expects a theoretical inflow of crypto assets in the amount of 350 billion euros. A comparison shows that this is a massive sum: Bitcoin’s current market capitalization is 527 billion euros.
The” largest investment vehicle ” in Germany
Around 1.87 trillion euros are to be tied up in around 4,000 special funds. Hildebrandt’s calculation is based on this estimate. The expert speaks of the” largest investment vehicle ” that exists in Germany. A lot of money is in these funds – and now for the first time you have the opportunity to invest in crypto.
The Federal Association of Alternative Investments (BAI) praises the new legislation and also calls for an extension of special funds to mutual funds. In general, industry observers assume that the crypto industry will benefit from the Fund Location Act, as it further legitimizes the still young asset class cryptocurrencies.
Institutional interest in cryptocurrencies is also growing outside Germany. As a survey by the US major bank JP Morgan has revealed, more than 20 percent of all institutional investors who have not yet invested in crypto currencies are most likely to do so in the future. More than 3,400 investment bankers from 1,500 banks participated in the survey. In addition, the major bank writes in a new report that Proof of Stake will become more and more attractive once the Ethereum upgrade 2.0 is completed. According to JP Morgan, ETH could therefore grow into a $ 40 billion industry by 2025.
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