In an attempt to boost the flow of cryptocurrencies in Germany, a new law has been put into effect. As per this law, the country can theoretically bring in around four hundred and fifteen billion USD worth of cryptocurrencies inflow. The law was put into effect today on Sunday, 4th July 2021.
This law was introduced by the Fund Location Act of Germany earlier this year in April. It got approval from the parliament soon after it was proposed.
With the implementation of this new law, “Spezialfonds” or special funds, as we know it, will be able to invest up to 20% of their portfolios in crypto. Spezialfonds are assets that have the most liquid classes and are used as a German institutional fund vehicle. They are a favored asset of intuitional investors due to their high liquidity features.
At the moment, many countries don’t allow more than 5% of the total investment portfolio to be invested in currencies.
With investments up to 20% in cryptocurrencies, the special funds will be able to bring in much larger profits to the country.
So, how does this new permission promise to bring in $415 billion worth of cryptos inflow to Germany? This is an outcome that was derived from the ideal scenario. In this scenario, all Spezialfonds in Germany choose to dedicate a full 20% of their portfolios to crypto assets. This will equate to almost 350 billion euros which amounts to 415 billion USD.
This estimate was made on the basis of the total assets in Germany that are considered to be special. It was reported by Sven Hildebrandt who is the CEO of Distributed Ledger Consulting. It was also referenced by Boersen Zeitung which is a financial newspaper in early April.
In Germany, Spezialfonds or special funds are the leading institutional investment vehicle. This means that they are owned mostly by institutional investors.
If this law works out as planned and all of the special funds in Germany allocate 20% of their portfolios to cryptocurrencies, it will severely boost the crypto flow in the country. It can make a remarkable difference in all of Europe and strengthen Germany’s position as a crypto heavyweight. Germany has the largest economy in the entire Eurozone.