German institutional funds can enter for the first time from tomorrow cryptocurrencies as bitcoin (BTC) in ethereum (ETH) to invest. Bloomberg news agency reported this on July 30:
Germany to allow certain institutional funds to invest billions of dollars in crypto for the first time https://t.co/VfkXaECiaH
— Bloomberg Crypto (@crypto) July 30, 2021
These funds, called Spezial Funds, are subject to special rules and are only accessible to institutional investors such as pension funds and insurers. The funds will be allowed to invest up to 20% of their portfolio in crypto from August 2.
There are as many as 4,000 such funds in Germany that together manage more than €1.8 trillion ($2.1 trillion) in assets. A 20% allocation could mean as much as $360 billion ($420 billion) pouring into the crypto market. That could be a significant boost for crypto prices.
However, says Tim Kreutzmann, crypto expert at the Federal Association of Investment and Asset Management (BVI), the German fund industry body, that most of these funds will initially remain well below 20%:
“Most funds will initially remain well below 20%. On the one hand, institutional investors such as insurers have strict legal requirements for their investment strategies. And on the other hand, they must also want to invest in crypto.”
Kamil Kaczmarski, financial advisor at Oliver Wymann consultancy, also says the funds will initially be hesitant. He says the volatility of prices may not appeal to German institutional investors, who are traditionally very conservative, according to the adviser. He expects they will start small at first and may take another five years for these funds to get close to the 20% mark.
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