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- Germany has passed a new law that exposes over 4,000 institutions to cryptocurrencies.
- As one of the most affluent and crypto-friendly countries in the world, the move could spark a massive crypto adoption campaign.
The year 2021 has seen a major turnaround in the adoption of cryptocurrencies by institutions. After years of dismissing the market as a fad that will fade away, institutions are beginning to embrace crypto. With them, governments have also taken an interest and are beginning to establish clear regulatory guidelines. In Germany, the government has passed a new law that allows thousands of institutions to invest in cryptocurrencies.
Over 4,000 institutional investment funds and wealth managers will be allowed to invests as much as 20 percent in cryptocurrencies with the new law that comes into effect on July 01. The legislation has since sparked excitement in the crypto community. Germany is one of the most affluent countries not only in Europe but in the world, with institutions cleared to invest in crypto, this could spark one of the largest crypto adoption campaigns. Institutions are regarded as key players in the market for their heavy purchase and ability to weather out the volatility that characterizes the crypto market. Furthermore, this could set Germany as a financial investment hub.
In an interview, German parliamentarian Frank Schäffler applauded the move noting;
The addition of crypto assets in Spezialfonds is an important step for their acceptance. Here, the law is going in the right direction, and we expressly welcome it
Last week, the German financial watchdog, Financial Supervisory Authority (BaFin) issued Coinbase a crypto custody licence. In a press release, BaFin confirmed that Coinbase is the first company to receive the license. Germany passed a law requiring crypto firms to apply for a crypto custody licence in late November with Coinbase applying in the late spring of 2020. BaFin has confirmed that there are applications in “advanced stages” and their approval will be confirmed in the coming months.
Related: Coinbase will list every token, CEO says as Binance is banned in the U.K
Germany leads in Europe
Across the border, the U.K has also taken a more hands-on approach to cryptocurrencies in the last few months. The Financial Conduct Authority (FCA) which has been mandated to overlook crypto firms has in recent weeks cracked down on the space going as far as banning one of the largest crypto exchanges, Binance. The FCA ruled that Binance can’t conduct any regulated activity in the U.K. The agency has further revealed that in recent weeks, around 64 crypto firms have withdrawn their applications with the agency.
Read More: FCA report reveals that 64 crypto firms have withdrawn applications
With the U.K taking a harsh stance and little been done by other European countries in terms of regulations, Germany looks poised to become the financial investment hub of the continent.
