Germany — Eurozone’s largest economy — might soon be continuing bitcoin adoption as it explores allowing some institutional funds to invest billions of euros into crypto assets for the very first time.

The Law In A Nutshell

According to a Bloomberg report on Friday, the German government is set to enact a new law that will let institutional fund managers in the country — known as Spezialfonds — allocate up to 20% of their portfolios to bitcoin and other digital currencies starting from next week.

The Fund Location Act which was introduced in April 2021, will take effect on August 2, opening the Spezialfonds floodgates to institutional investors including insurance companies and pension funds. This means that the funds — which presently manage approximately 1.8 trillion euros in assets — will not be accessible to the general public.

The new move is intended to attract crypto investments in Germany as the nation lags behind other European nations on the crypto front owing to the ongoing hurdles.

If all the special funds invest 20% in crypto, nearly as much as $415 billion could possibly flow from other assets into the crypto market. However, Tim Kreutzmann, a crypto pundit at Germany’s BVI suggests that the majority of the funds will most likely take a cautious approach and “stay well below the 20% mark” as they weigh the risks of putting their clients’ funds in the ultra-volatile assets.

Good For Bitcoin

Policymakers across the globe have been hesitant to accept cryptocurrencies whose prices have been seesawing and whose markets have been composed mostly of a trifling number of investors.

The new legislation could turn out to be a remarkable move for broader acceptance of crypto by institutional investors across Europe, considering Germany’s status as the continent’s dominant economic force. In other words, more European nations could be motivated to follow a similar path.

Moreover, there have been other indications of such crypto acceptance coming from Germany over the past couple of months. For instance, the country granted cryptocurrency exchange Coinbase a license to offer crypto custody. Additionally, Germany’s largest bank, Deutsche Bank, revealed in February its plans to offer high-touch crypto custody services to its institutional clients.