Germany has passed a new law that would allow thousands of institutional investment funds to invest in cryptocurrency

A new law in Germany now permits over 4,000 institutional investment funds to gain exposure to cryptocurrencies. The move could spark massive cryptocurrency adoption in Europe’s largest economy over the next few months or years.

The new legislation permits wealth and institutional investment fund managers (called Spezialfonds) to invest as much as 20% of their portfolio in cryptocurrencies. The law is set to come into effect on 1 July.

This latest development has been received positively in the cryptocurrency space, with some experts claiming that it could boost Germany’s position as a financial investment hub. They also believe that it could boost the cryptocurrency sector by legitimising the asset class.

German parliamentarian Frank Schäffler told Decrypt that the move is a crucial step in ensuring cryptocurrency development in Germany. “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,” he said.

The law was cleared last week by Germany’s federal parliament, the Bundestag, and is set to be rubber-stamped by the country’s Federal Council as soon as possible. It will affect the existing Spezialfonds and new ones established by institutional investors such as financial institutions, insurance companies, and pension funds.

Thanks to this latest development, over 4,000 existing investment funds in Germany will have access to Bitcoin and other cryptocurrencies. Sven Hildebrandt, CEO of Germany-based Distributed Ledger Consulting (DLC), acknowledges that this is a huge development. He pointed out that Spezialfonds enjoy investments to the tune of $1.8 trillion.

Currently, these Spezialfonds don’t have any cryptocurrency investments. Hence, allocating 20% of their portfolio could benefit the crypto sector immensely. The cryptocurrency space has seen billions enter the market from institutional investors over the past year.

This is a massive development considering the fact that institutional investors and corporate entities have not historically thought highly of cryptocurrency. Currently, an increasing number of financial institutions believe Bitcoin is a store of value and an excellent hedge against inflation; this news comes after American investment bank JP Morgan announced it would offer Bitcoin services to wealthy clients.

This post was originally published on Coinjournal.