Germany allows up to $415 billion investment in cryptocurrency in new crypto-friendly legislation

Germany has passed a “crypto-friendly” law called the Fund Location Act, which implies all specialized investment funds can invest up to 20% of their USD 2 trillion assets in cryptocurrency. This law can bring US$415 billion in potential crypto investments. Market experts believe this new law can bring a large share of Germany’s financial capital into the cryptocurrency industry.

Late last month, BaFin granted Coinbase permission to provide crypto custody services and proprietary trading. The licence allows Coinbase Germany GmbH to conduct proprietary trading of crypto assets.

Germany’s current crypto regulators state that all German residents and institutions are permitted to buy, sell and hold cryptocurrencies, as long as it is done through a BaFin licenced exchange. According to FXLeaders, a big allocation of crypto to this market could result in significant developments across Europe, since Germany holds the biggest economy among the European countries.

It has to be noted that though the EU was among the initial countries to make cryptocurrency legal across the continent, there is no specific regulation by the European Union that governs crypto activities. In Germany, it falls under the German Federal Financial Supervisory Authority (BaFin), which can be used for payment purposes.

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Germany’s take on cryptocurrency comes as somewhat of a relief for crypto enthusiasts in the wake of China’s crackdown. On Tuesday, China’s central bank called for the shutdown of a company that was suspected of providing software services for virtual currency transactions. The People’s Bank of China warned institutions not to provide other services related to virtual currency, including providing business premises or marketing.

In May, the Asian nation banned financial institutions and payment companies from providing crypto-related services and in June, there were massive arrests of people suspected of using cryptocurrencies in nefarious ways. Furthermore, banks and payment businesses were ordered to stop providing cryptocurrency services – with Weibo suspending crypto-related accounts.