Germany will reportedly allow selected institutional funds to invest billions of dollars in crypto assets for the first time.
Policymakers throughout the world have been slow to accept crypto assets, whose prices have fluctuated while the cryptocurrency market remains dominated by a tiny number of investors.
The move indicates a shift in the asset class’s popularity, following investments by some of the industry’s biggest names, including Mike Novogratz and Alan Howard.
A new regulation that takes effect from 2nd August will allow so-called Spezialfonds with specified investment restrictions to invest up to 20 percent of their assets in Bitcoin and other crypto-assets.
The funds, which are solely accessible to institutional investors like Pension funds and Insurers, presently handle nearly $2.1 trillion in assets.
Mr. Tim Kreutzmann, an expert on crypto-assets at BVI, Germany’s fund industry body commented that “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, most funds will initially stay well below the 20 percent mark.”
According to Mr. Kamil Kaczmarski, a financial services consultant at management consultancy firm Oliver Wyman, the assets’ volatility may not be appealing to such investors in Germany, who are usually conservative.
He anticipates funds to experiment with cryptocurrencies at a modest level, with the majority of them taking at least five years to reach close to the barrier.