German Fund Management Companies to Invest 20% of Funds into Crypto

At least 4,000 asset management firms of Germany have been allowed to invest 20% of the funds for investment in crypto. A landmark initiative was taken to encourage the asset management industry towards the adoption of Bitcoin and other digital assets. Collectively within these four thousand fund managers, the assets under management are worth more than 2 Trillion in Euros.

As promised, the Government in Germany has finally implemented the most awaited legislature i.e. Fund Location Act. The Act was passed by the majority of lawmakers on 22nd April 2021 and has now been officially implemented from 1st July 2021.

Under the newly enacted Act, the firms involved in the asset management field have been allowed to utilize available funds in further investments. As per the law, now the local asset management firms can use 20% equivalent value of the assets under management into crypto investment. However, the option of bringing crypto into portfolios has been sanctioned for 4,000 asset management firms. The firms can utilize their funds in Bitcoin or any other specific crypto-related investment.

Amongst these 4 thousand firms, an amount of Euros 2 Trillion worth of funds is under management and control. However, the entire asset management industry of Germany has more than just a couple of thousands of asset management companies. Four thousand firms only represent 20% of the German asset management companies. If the whole German asset management industry is evaluated then the asset under management would be over and above US$ 20 Trillion.

Germany is one of the world’s leading countries after the US in terms of having a very active asset management industry.

According to German crypto analysts, the move is a very well-thought-of decision. The prevailing situation warrants that Germany should explore multi-dimensional options to curtail the present economic crunch. Like other European countries, Germany too had seen a severe situation of the Covid-19 pandemic. However, the country got in control of the problem in the early days. Although there are still Covid-19 cases, yet as compared with other European countries, the number of cases in Germany is on the lower side.

The country has also very recently allowed exchanges like Binance and Coinbase to enter the German crypto market. Both of the exchanges have been given permission to render crypto trade services to German investors. In addition, these exchanges have been further allowed to make available for trading their respective native coins.

Germany is also interested in the CBDC project and is currently considering the option of working on the CBDC project. However, the Central Bank of Germany is still weighing the potential of CBDC, its risks, and the benefits. But so far no announcement has been made from the official quarters whether any such CBDC project is initiated or not.

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