SPECIAL CRYPTOCURRENCIES FUND LOCATION LAW COMES INTO FORCE

  • Cryptocurrencies investments will gain more mainstream attention within the coming weeks
  • Germany has approved the Fund Location Law, which will now allow some special funds to invest in cryptocurrencies
  • Sven Hilderbrandt believes that the latest development will increase the investments and infrastructure-related activities in the crypto ecosystem
  • The latest approval will bring trust among the cryptocurrencies investors globally
  • Entry of private capital funds are still prohibited that raises criticisms

Cryptocurrencies investments have become very popular among several fund managers with other investors. However, in Germany, several special funds were forbidden to invest in the emerging assets class. Following the scenario, the German government has recently passed a new law to help these funds. 

On July 1, 2021, the government approved the Fund Locations Acts. It is known that the latest act allows domestic special funds to invest in digital currencies. Hence, now such funds can invest about 20% of the assets under management (AUM) in cryptos like Bitcoin.

HOW WILL THE NEWS IMPACT THE CRYPTOCURRENCIES MARKET?

The cryptosphere has witnessed favorable moves by some countries after several strict regulations by financial regulators globally. As a result, experts in the cryptosphere have estimated that now the cryptocurrencies market can witness an inflow of about 350 billion euros ($415 billion).

Lion Euros, which is one of the fifth asset managers with about 1.87 trillion euros assets under management. These assets are currently tied up with about 4,000 open domestic special funds. So such an amount that could have entered the crypto market before can now get in.

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HOW DID THE LAW COME TO FORCE?

The Fund Location Law penned by the Ministries of finance and economy by Olaf Scholz and Peter Altmaizer. On April 22, 2021, the Bundestag finally approved the act in the second and third readings. And on July 1, 2021, the Bundestag gave its consent that nothing will stand in the way of entry into force of the act.

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Researchers have considered that the new act integrates European Union guidelines. Primarily the show intends to simplify the cross-border distribution of investment funds through uniform regulations.

INVESTORS GLOBALLY WOULD RECOGNIZE THE CRYPTO INVESTMENT AS SAFE

Bitcoin’s total market capitalization is more than 768 billion euros in the current scenario, as per the data from CoinMarketCap. In contrast, Sven Hilderbrandt, the chief executive officer of Ledger Consulting, cited a huge step to the Börsenzeitung.

Simultaneously, the CEO believes that such stronger regulation that came with the approval of the latest law could critically attract enthusiasts as an advantage. Several institutional investors have been observed facing heavy hits from financial regulators. Such investors would perceive cryptocurrencies investments to be safer.

CRYPTOSPHERE WILL WITNESS GREAT ACTIVITIES

On Thursday, Hilderbrandt had an interview with a local media outlet. In the interview, the CEO was asked whether the ecosystem will see a further increment in activities.

According to Hilderbrandt, the industry will see a spike in terms of activities on the market. No house wants to be the last. Still, several are in the exploratory phase and trying to grasp the blockchain topic. However, such people are optimistic that technology would occupy the most in the future.

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Moreover, space would now see more enhancement in terms of infrastructure and investment. Following the scenario, the cryptocurrencies ecosystem will now have to deal with both aspects to make clear at the latest with the first transaction on a public blockchain.

PRIVATE CAPITAL IS STILL PROHIBITED FROM ENTERING THE CRYPTO MARKET

It is known that the latest law only allows investments to special funds. In contrast, public funds are still restricted to enter the crypto market. Hence, The prohibition could keep private capital unnecessarily away from the crypto market. 

FEW HAVE SHOWN CRITICISM BESIDES PRAISES

Several associations have praised the steps of Germany. However, the praises were also associated with slight criticism regarding the prohibition of public funds into the cryptocurrencies market. 

The Federal Association of Alternate Investment has praised the approval of the law. Still, following the scenario, Frank Dornseifer, the Federal Association of Alternate Investment, has shown regrets.

On the other hand, Jochen Schenk, the central real estate committee vice president, shared some assessments. Schenk also regrets that the means that private capital can no longer be channelled into urgent infrastructure and sustainability investments.

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