German institutional funds to invest up to 20% in crypto

The new law allowing Spezialfonds to invest in cryptocurrencies comes into effect on 2 August

German investors could provide yet another frontier for Bitcoin and altcoin investment from institutional investors, continuing a recent trend that has seen more and more institutions seek opportunities in the sector.

According to Bloomberg, a new law allowing German Spezialfonds to legally invest a percentage of their holdings in cryptocurrencies comes into effect next week.

Per the report, the Fund Location Act that takes effect on 2 August 2021 will allow institutional investors in the country to put up to a fifth of their managed wealth into Bitcoin, Ethereum and other cryptocurrencies.

Spezialfonds reportedly account for about €1.8 trillion (roughly $2.1 trillion) of institutional wealth, meaning that if funds allocate the 20% allowed in the new law, more than $400 billion would likely end up in various crypto projects.

However, according to Tim Kreutzmann, an expert on crypto at BVI, it is likely most of the funds could “initially stay well below the 20% mark“, owing to various industry practices and expectations. Notably, the investment funds are available only to institutional investors like insurers and pension funds.

As it happens, it turns out Germany is one of three major European nations where Binance, the world’s largest cryptocurrency exchange by trade volume, will no longer offer its derivative products.

“While we do not actively market Futures and Derivatives Products locally, we plan to start further scaling down access to those products in the region. With immediate effect, users in the Netherlands, Germany, and Italy cannot open new futures accounts on Binance,” the exchange said in a statement.

According to the announcement posted on 30 July, Binance customers have 90 days to close any open derivatives positions.

The move comes as Binance continues to face increased regulatory pressure. Malaysia is the latest country to push the scrutiny button.

A notice issued by the country’s Securities Commission has given the exchange 14 days to disable the Binance.com website and cease all other exchange operations.