German Authorities to Allow Institutions to Hold Crypto Will Be Applicable from August 2nd

In a recent development, German lawmakers have allowed German companies to hold cryptocurrencies. The law comes into effect on 2nd of the August. It is another massive step by one of the most important European nations.

An estimated $415 billion worth of economic activity flow into the banking channels through cryptocurrencies as the law passed by German authorities goes into effect. The law further unfolds that from, August 2, 2021, German firms will be allowed to keep 20% of their overall assets in the form of crypto. However, the country’s economic experts said that the current law would set a strong base for widespread Bitcoin acceptance (BTC) and other crypto-assets. However, protection is offered by the country’s law enforcement authorities.

Bloomberg reports the new law passed by the German authorities alters Spezialfonds ruling regarding the “fixed investment rules.” Fixed Investment rules, also known, special funds, are available for institutional investors such as pension funds and insurers. Spezialfonds, as of this point, manages about $2.1 trillion, or 1.8 trillion euros, worth of assets.

Tim Kreutzmann is associated with a German fund management association BVI.  In his conversation with Bloomberg: he told people that most financial institutions would carry the crypto fund below the 20% mark. They will gradually go for the 20% mark.

Kreutzmann also said that post corona economic situation had experienced a paradigm shift. Institutions are going for a safe investment with gradual investments. However, independent investors are going for rapid expansion by investing huge.

“On the one hand, Institutional investors are looking forward to dealing with strict regulatory requirements. And the other side of the picture, they eagerly want to invest in the crypto market.”

Germany announced its first thorough blockchain strategy in 2019

giving 44 implementation measures. Which are set to be accomplished by the end of 2021.  Germany’s proposed 44 provisions also included user-friendly blockchain and crypto measures to make it easier for investors to enter digital assets trading.

Kreutzmann told Bloomberg, the biggest hazard regarding cryptocurrency is now authorities’ crackdown or volatile nature of the crypto market. However, the biggest hurdle is the complex nature of crypto transactions, which is beyond the understanding of the majority of the people.  Relatively less complicated measures would lure more and more people into the crypto market.

From the start of the 20201, European Union is actively working on fostering the blockchain and crypto trade mechanism.

Germany has emerged as the leading market for cryptocurrency exchange-traded products, or ETPs. With the application of the current law on, August 2, 2021, institutional investors would also enter the digital assets trading game.

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