(July 30): Germany plans to allow certain institutional funds to invest billions of dollars in crypto assets for the first time.
A law taking effect on Monday will let so-called Spezialfonds with fixed investment rules put as much as 20% of their holdings in Bitcoin and other crypto assets. The funds, which can only be accessed by institutional investors such as pension companies and insurers, currently manage about 1.8 trillion euros ($2.1 trillion).
Lawmakers worldwide have been slow to accept crypto assets, whose valuations have whipsawed and whose markets are dominated by a small number of investors. The move marks a shift of the asset class into the mainstream and follows investments by some of the biggest names in the finance industry, including Mike Novogratz and Alan Howard.
“Most funds will initially stay well below the 20% mark,” said Tim Kreutzmann, an expert on crypto assets at BVI, Germany’s fund industry body. “On the one hand, institutional investors such as insurers have strict regulatory requirements for their investment strategies. And on the other hand, they must also want to invest in crypto.”
The volatility of the assets might not be attractive to such investors in Germany, who are traditionally very conservative, according to Kamil Kaczmarski, a financial services adviser at Oliver Wyman LLC, a management consultancy firm. He expects funds to experiment with crypto currencies at a low level, with most of them not getting close to the threshold for at least five years.
Deutsche Bank AG’s asset manager DWS group is monitoring developments, but is not currently planning to offer any funds that buy crypto, according to a spokeswoman. DekaBank, one of the country’s biggest asset managers, has been considering investing in digital currencies but hasn’t made a decision yet, a spokesman said.