According to a recent Bloomberg report, Germany plans to allow certain institutional funds to invest billions of dollars in cryptocurrencies for the first time. This Monday the entry into force of a law is expected so that the Spezialfonds place up to 20% of your holdings in Bitcoin and other crypto assets.
This news is important, considering that lawmakers around the world have been slow to accept cryptocurrencies. Meanwhile, cryptocurrency valuations have skyrocketed and their markets are dominated by a small number of investors. This may just be the start of something bigger, considering that DekaBank, one of the largest asset managers in the country, has been evaluating investing in cryptocurrencies as well.
What are the Spezialfonds in Germany?
Alternative closed investment funds (AIF) are investment funds as defined by the German Capital Investment Code (KAGB) that invest in alternative capital investments such as real estate, private equity or renewable energy. A special form of AIF is the Spezialfonds o Special AIF. These funds are created in Germany by individual investors (individual mandate), or several investors. They are usually institutional investors or professional investors.
The Spezialfonds, which can only be accessed by institutional investors such as pension companies and insurance companies, currently manage around 1.8 trillion euros (2.1 trillion dollars).
«Most funds will initially stay well below the 20% mark». This according to Tim Kreutzmann, a cryptocurrency expert at BVI, Germany’s fund industry body. He also mentioned 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 cryptocurrencies».
What can we expect from these investments?
In fact, not much. At least not initially, considering that the volatility of cryptocurrencies might not be attractive to these investors in Germany. Germans who invest in these types of funds are often considered very conservative.
Therefore, experts related to the subject hope that the Spezialfonds experiment with cryptocurrencies at a low level in Germany. They even hope that most of them will not come close to the threshold for at least five years.
Bloomberg also mentioned that Deutsche Bank AG’s group of DWS asset managers is monitoring developments. However, at this time, they do not plan to offer any funds to buy cryptocurrencies.