New legislation enabling 4,000 Spezialfonds to invest in crypto assets becomes law in Germany on July 1.
Spezialfonds are favored by institutional investors, and interest in them is now exploding, according to analysts.
In Germany, new legislation enabling managers of the most popular institutional investment funds—the so-called Spezialfonds—to allocate 20% of them to crypto-assets is set to come into force on July 1.
The measure has been hailed as a big boost to Germany’s position as a financial investment hub, and experts believe it will nurture the crypto industry as a whole by further legitimizing the asset class.
“The addition of crypto assets in Spezialfonds is an important step for their acceptance,” German parliamentarian Frank Schäffler told Decrypt. “Here, the law is going in the right direction and we expressly welcome it,” he added.
The law cleared Germany’s federal parliament, the Bundestag, last Thursday, and is due to be rubber-stamped by the country’s Federal Council imminently. It will apply to both existing Spezialfonds and to new ones set up by institutional investors such as financial institutions, insurance companies, and pension funds. In all, around 4,000 existing investment funds will now be eligible to invest in Bitcoin and other crypto assets, Sven Hildebrandt, CEO of Germany-based Distributed Ledger Consulting (DLC) told Decrypt.
“This is damn huge,” Hildebrandt said. Around €1.2 trillion ($1.8 trillion) is invested into Spezialfonds, which have fixed investment conditions, and “right now, 0% of the funds are invested [in cryptocurrencies], because they’re just not allowed.”
Hildebrandt has lobbied for over two years to update the legislation in this area, alongside BVI, the nation’s Asset Management Association. When the new regulations become law on July 1, if Spezialfonds (excluding those designed purely for physical assets—around a third) choose to place even a 1% fund allocation in crypto, the impact on the crypto industry would be enormous, he said.
“This won’t happen overnight, but we are talking about the largest investment vehicle that we have in Germany—literally all the money is in there,” he said. Theoretically, up to €350 billion ($422 billion) could enter the crypto market from Spezialfonds alone, he explained. (For comparison, Bitcoin’s current market cap is $1 trillion.)
Institutional crypto investment vehicles in Germany
There is no United-States equivalent to Spezialfonds, but they’ve been likened to the Special Investment Funds (SIFs) in Luxembourg, and Qualifying Investor Funds (QIFs) in Ireland. These types of investment vehicles are attractive to institutions because they allow for flexibility and are much less restrictive in requirements for liquidity, diversification, restrictions on borrowing, and leverage. Simultaneously, a robust regulatory framework provides assurance for investors.
Now, the funds are set to become the latest addition to the tools institutions have at their disposal enabling them to buy into digital assets without purchasing actual cryptocurrency—thus circumventing the need to deal with crypto exchanges or digital wallets.
Germany’s bold moves follow its introduction of law at the beginning of 2020 allowing banks to sell and store cryptocurrencies.
Financial Services company ETC Group became the first to launch a Bitcoin ETP on the German stock exchange in 2020, after Germany’s financial regulator, BaFin, recognised cryptocurrencies as financial instruments.
Since then, Bitcoin exchange-traded funds (ETPs) have proliferated on Germany’s exchanges, with crypto-asset management firm Iconic Funds due to list its Bitcoin ETP this week. Leading fund administrator State Street will serve as the administrator of the upcoming ETP, in a first for the international bank. Fidelity Digital Assets and Coinbase Custody will be the custodians.
The Frankfurt-based startup is a joint venture between crypto-asset management group Iconic Holding and Cryptology Asset Group, which was founded by legendary entrepreneurs Christian Angermayer and Mike Novogratz.
“There is massive and rapidly growing demand from all sorts of investors who want to access crypto assets,” said Michael Geister, Iconic’s Head of Crypto ETPs, noting that the European market for crypto ETPs has grown to over $5 billion in assets under management “in a short period of time.”
Hildebrandt believes crypto-enhanced Spezialfonds could be even bigger, and said interest from institutions in them is “exploding.” Germany, he explained, is a country that is very keen on regulatory compliance.
If this “insane” interest bears out and all the eligible funds were to invest their full 20% allocation in Bitcoin, that would constitute around a third of the crypto asset class’s current market capitalization. That, however, is an extreme case—“which will never ever happen,” he said.
Hong Kong-based Crypto.com announced on Thursday it is now enabling Cosmos’ Inter-Blockchain Communication (IBC) functionality for cross-chain transfers. According to Crypto.com, According to the duo, this integration creates new capabilities for future cross-chain implementations of the Crypto.org Chain and other IBC-enabled chains.
“The integration allows for the transferring and receiving of assets (tokens) and data using the ICS20 standard on the Crypto.org Chain Mainnet. IBC assets will be available in the Bank module of the Crypto.org Chain, and CRO on other IBC-enabled chains.”
Cosmos and Crypto.com further revealed as part of its development on IBC, the project will create a bridge between Crypto.org Chain to Ethereum protocols, bringing on board Ethereum developers as innovative projects to the Crypto.org Chain ecosystem. Sharing more details about the integration, Eric Anziani, COO of Crypto.com, stated:
“The Inter-Blockchain Communication Protocol (IBC) enables self-sovereign networks to connect, which will lead to building a strong ecosystem of networks thanks to the flexibility and open nature of IBC. The IBC launch marks the end of “network tribalism”. It also aligns with one of Crypto.org Chain’s goals of building an open ecosystem — one that is welcoming to and supported by innovative projects, including Payments, DeFi and NFT initiatives.”
Founded in 2016, Crypto.com serves over 10 million customers today with its crypto app, along with the Crypto.com Visa Card, the Crypto.com Exchange, and Crypto.com DeFi Wallet.
“Crypto.com is built on a solid foundation of security, privacy and compliance and is the first cryptocurrency company in the world to have ISO/IEC 27701:2019, CCSS Level 3, ISO27001:2013 and PCI:DSS 3.2.1, Level 1 compliance, and independently assessed at Tier 4, the highest level for both NIST Cybersecurity and Privacy Frameworks.”
U.S. banking giant Goldman Sachs has announced the details of the cryptocurrency trading team. According to a staff memo, the trading group is buying and selling futures on CME group and non-deliverable forwards.
Goldman Sachs Forms Crypto Trading Team
The cryptocurrency trading group formed will be a part of Goldman’s global currencies and emerging markets division. The memo is penned by Goldman partner Rajesh Venkataramani. The first report of the memo came on Friday.
According to Rajesh Venkataramani, the team will be part of Goldman’s global currencies and emerging markets (GCEM) unit. His official statement reads,
“I am pleased to announce the formation of the firm’s cryptocurrency trading team, which will be our centralized desk for managing cryptocurrency risk for our clients. The Crypto trading team will be a part of Global Currencies and Emerging Markets (GCEM), reporting to me, within the firm’s Digital Assets effort led by Mathew McDermott.”
Derivatives of The Trading Group
The announcement affirmed that Wall Street is allowing cryptocurrencies as a mode of payment. The adoption of digital currency seems to be on a continuous hike. Recent news from the rivalry, Morgan Stanley chose to offer its wealth management clients access to Bitcoin funds in the recent past months.
The derivatives of the Trading group facilitating investors to take note of Bitcoin future prices. In order to not to deal with the physical asset, the contracts will be settled in hard cash, which it “is not in a position to trade,” according to the memo.
The launch of the Digital Assets dashboard by Goldman this Thursday will allow its traders access to crypto market data and news.
“The newly formed team has already traded Bitcoin-backed non-deliverable forward contracts and CME Group’s Bitcoin futures.”
Last month, Goldman Sachs CEO David Solomon mentioned that,
“He was expecting a big evolution in the cryptocurrency space when it comes to regulations.”
Altcoins That May Hit New ATH in May! Since the past fortnight, many large and small market cap gems rallied high forming a new milestone. However, the Altcoin season is believed to have initiated with the jump in the Ethereum price. A popular analyst and the Managing Partner at MoonrockCapital, Simon Dedic, lists out 5 …
The altcoin season is said to have started as most of the top 100 cryptocurrencies are now a billion dollar asset. Moreover, many of the altcoins have even surpassed their previous ATH and formed new highs in the recent rally.
As the Bitcoin dominance rate kept sliding, the Altcoin space has strengthened itself to manifest a growing dominancy and extended user adoption. Additionally, Ethereum price is expected to keep the bullish momentum intact to propel high. As most of the altcoins are expected to surge with the ETH price flow jumping towards the north.
Collectively, the altcoin season is expected to go parabolic as most of the altcoins are expected to discover new highs. No doubt analyst Simon listed the coins to have a watch in the currency month. Yet there are many other promising projects with strong fundamentals, and may also rally towards new high.
SEC chairman Gary Genslersaid on Friday that greater protection for investors is required in cryptocurrency markets.
Gensler is no stranger to the cryptocurrency world. The former Goldman Sachs investment banker has long been viewed as a strong candidate to take the SEC chairman role.
Gensler was sworn in a few weeks ago as Joe Biden’s choice for the next head of the SEC. During Obama’s presidency, Gensler was in charge of the Commodity Futures Trading Commission (CFTC) and was in charge of regulating derivatives.
What makes this particularly interesting is that he will become the first crypto and blockchain expert to hold the highly regarded position. A former MIT professor, he taught a course entitled “Blockchain and Money” and believes the two are a “catalyst for change.” Gensler stated at his SEC nomination hearing:
“Bitcoin and other cryptocurrencies have brought new thinking to payments and financial inclusion. But they’ve also raised new issues of investor protection that we still need to attend to.”
Despite his support and optimism, the new SEC chairman also expressed concern about the protections investors are not getting in the crypto asset market. Gensler understands the attraction of bitcoin and other coins, but worries investors are taking on more risk than necessary.
“It’s a digital, scarce store of value, but highly volatile,” Gensler says. “And there’s investors that want to trade that, and trade that for its volatility, in some cases just because it is lower correlation with other markets. I think that we need greater investor protection there.”
He believes that as long as technology continues to change the way consumers interact with markets, regulations to protect said consumers have to keep pace.
He went on to say that he believes BTC is a “speculative” store of value and that the Securities and Exchange Commission should remain “tech neutral” when looking at innovations in markets.
The new chairman believes there needs to be an official authority for a regulator to oversee digital currency exchanges.
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Matthew De Saro is a journalist and media personality specializing in sports, gambling, and statistics. Before joining BeInCrypto, his work was featured on Fansided, Forbes, and OutKick. With a background in statistical analysis and a love of writing, he takes an outside-the-box approach to reporting news.