Germany’s “Fund Location Act” Allows Funds 20% Fund Allocation in Bitcoin and Other Crypto Assets
Germany is moving swiftly to legitimize crypto assets. With the passing and introduction of the Fund Location Act a few months ago, a new milestone has now been reached.
On April 26th, Germany set a new milestone in the legitimization of crypto assets by passing the Fund Location Act. This act allows German authorities to tax digital currencies as long as they are stored in a wallet. Previously, authorities would have been unable to track the coins unless they were converted to fiat currencies.
Germany is set to become the first European country to allow certain institutional funds to invest in crypto assets. That means there will be a lot more capital available for investments, which should provide a boost for the crypto markets. Institutional investors (i.e., pension funds) currently manage $2.1 trillion, with 1.8 trillion euros under their control.
There have been a lot of people voicing their hesitations with cryptocurrencies, especially as it’s been shown that they can move up and down in value quickly. Apart from this, the cryptocurrency markets are often dominated by a few investors. These factors make it hard to accept them as a mainstream investment product.
“Most funds will start at a very low percentage, about 5-10%,” said Tim Kreutzmann, an expert and crypto-assets. “On the other hand, institutional investors such as insurers have strict regulatory requirements for their investments.”
German investors might not be comfortable with the volatility of crypto and related assets. They prefer to invest in German stocks and sustain the investments throughout their lifetime. They expect funds to experiment at a low level with cryptocurrencies, with most of them not reaching the threshold for at least 5 years.
Deutsche Bank AG’s asset manager DWS is keeping a close eye on developments in crypto, but they’re not planning to offer any funds that buy crypto at the moment. DekaBank, a big German asset manager, has been considering investing in crypto.