The German government announced that institutions can invest 20% of their portfolios in cryptocurrency including bitcoin, now that almost 4,000 institutional funds are managing almost 2 trillion euros in assets.
For the first time, Germany plans to allow certain institutional funds to invest billions of dollars in crypto assets.
So-called Spezialfonds that have fixed investment rules will be able to place as much as 20% of their holdings in bitcoin and other crypto assets beginning Monday. Currently, the funds manage 1.8 trillion euros ($2.1 trillion) and are only accessible by institutional investors, like pension plans and insurers.
A few large investors dominate the market for crypto assets, whose valuation whipsawed and whose valuations fluctuated rapidly. In addition to Novogratz and Howard, other major names in the finance industry have invested in the asset class.
“Most funds will initially stay well below the 20% mark,” said Tim Kreutzmann, an expert on crypto assets at BVI, Germany’s fund industry association. “Institutional investors like insurers face strict regulatory requirements regarding their investment strategies. As well as that, they must also be interested in investing in crypto.”
Such investors in Germany, who are traditionally very conservative, might not find the volatility of the assets appealing, according to Kamil Kaczmarski, a financial services adviser at Oliver Wyman LLC. In five years, funds are unlikely to get close to crypto currency threshold, with most of them experimenting at a low level.
A spokeswoman for Deutsche Bank AG’s asset manager DWS group said that the company is monitoring developments, but does not plan on offering any crypto funds in the near future. A spokesman for DekaBank, one of the country’s largest asset managers, said the bank has been considering investing in digital currencies, but has not committed yet.
