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GDF state the new German law on investments will increase crypto assets

By Joy Dumasia

August 06, 2021

  • Europe
  • Gdf

Global Digital Finance (GDF), the cryptoassets and digital finance industry membership body, states that the new German rules on institutional investment in crypto assets will open gates for mass adoption of the asset class.

GDF expects other regulators to follow suit and says a consultation paper from the Bank for International Settlements is already providing confidence for financial institutions to invest in crypto and has set out a potential framework.

The new German law, which came into effect on August 2nd, Spezialfonds – also known as special funds – can hold up to 20% of their assets in cryptocurrencies paving the way for increased investment by pension funds and insurers in Germany. Analysts predict the move could mean up to $400 billion of crypto investment by Spezialfonds, holding more than $2.1 trillion of assets.

GDF expects others to follow the ‘very proactive approach’ of German regulators and also highlights the decision by the Securities and Exchange Commission in the US to allow special purpose broker-dealers to invest in cryptoassets as a great starting point.

Lavan Thasarathakumar, Director of Regulatory Affairs EMEA at GDF, said: “This opens the gates for mass adoption. Increased institutional investment into cryptoassets will pave the way for new products and services to be produced and for more innovative solutions that can take the crypto industry onto a new plain and deliver on some of the benefits that it has promised. The key component of the law is that it sets clear guidelines under which financial institutions will be expected to invest in cryptoassets. This gives confidence and a mandate for institutions to be able to invest money into crypto.”

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