$350 Billion About To Enter Crypto
News juice that we’re pickling, and Germany is bulldozing their way into the news.
Coming from bitcoin.com
“Coinbase Approved to Enter German Cryptocurrency Market”
“The German Federal Financial Supervisory Authority (Bafin) has awarded Coinbase Germany GmbH a license for crypto custody and trading under the new licensing regime introduced in January 2020.”
So this is a law that is now coming into effect that was written last year.
“According to Coinbase, the Bafin licensing framework is the first of its kind in the European Union and Coinbase Germany is the first company to be awarded such a license.”
This licensing framework could be replicated across the world, and it paves a way for more regulatory partnerships between exchanges and governments.
So Germany and the European Union are in a way, paving the way for this type of accreditation to be replicated. Germany is the largest European crypto market so this is big news for crypto and a lot of potential retail investors in Germany.
But why have one pint of German bullish crypto news when you can have two pints.
“As much as €350 billion can start entering the crypto market this Thursday after a law passed earlier this year comes into force in Germany.
The new Fund Location Act (Fondsstandortgesetz) allows 4,000 existing special funds (spezialfonds)- as well as new special funds- to invest up to 20% on bitcoin and eth.”
So what are special funds?
“Spezialfonds are considered the German institutional fund vehicle of choice for most liquid asset classes, and for property within distinct structures.”
So the special funds are assets that are managed by different underlying fund managers that unify under the umbrella of the so-called Master KVG structure. Master-KVG is a German-regulated investment management company authorized and supervised by the German Federal Financial Supervisory Authority who is licensed under German investment law.
They are a highly regulated group of investors that are now, given permission to invest in cryptocurrency. Similar classes of investors in the US, have been calling for this permission to be granted by the US. There is a bitcoin ETF, and that has allowed them to invest in that derivative, but many of them aren’t given permission to directly use their funds to invest in cryptocurrencies.
So this is a big development in Germany and for German investors.
Speculating here a little bit, should every special fund in Germany choose to allocate the full 20% in crypto, that would equate to €350 billion or $415 billion based on the total assets under management of such funds in Germany.
Special funds are usually long-term investments, and in the long-term bitcoin’s very limited 21 million supply should potentially act to provide decent yearly returns on average. Looking at bitcoin as a long-term investment, some of these funds may treat it as such and choose bitcoin over other long-term investments such as bonds.
These two news stories are very bullish, but it’s interesting that the chart sentiment is looking a bit bearish. The seven day average of the daily transaction account by bitcoin has dipped below $300,000 for the first time since March 2020.
As we can see, crypto can get a lot of good news, but sometimes the markets don’t reflect it. Similarly, when crypto gets really bad news, the markets might not reflect it. So as we see cryptocurrencies and bitcoin can have great news come out, that you think would inspire a rising price, but it does the opposite. Similarly, sometimes, news can come that is like a ‘big ‘ole FUD patty’ and the price goes up.
This is the nature of cryptocurrencies, and it always brings us back to the reality that in order to sleep at night it’s important to diversify your cryptocurrency portfolio. So that you can feel safe while you’re galloping through the wild west of cyberspace where a once-in-a-lifetime technological innovation merges with a once-in-a-generation pandemic and potentially once-in-a-lifetime financial upheaval.
If diversification is a big part of comforting yourself through this storm then what are some of the other ways you can protect yourself?
This brings us to a product called Ydragon.
Diversifying in cryptocurrency is a little bit easier on Coinbase than it is in DeFi. It’s much easier to do with big projects that have large market caps than it is with the smaller cap projects that are much more volatile and exist on multiple different blockchains and are often not on centralized exchanges.
Ydragon grants users a broad exposure to top crypto projects across multiple chains and it gives you access to all the farming rewards on all the underlying projects without the time, hassle, and complications of farming.
Essentially this is a project that aims to make DeFi investing and diversification easy, and it simplifies the process of farming. They do the research for you, they identify top-performing projects and they give investors passive revenue from yield generation. This combination of features is valuable in the DeFi space.
You can go check them out and learn more at ydragon.io
Friends and family, wishing you the best of luck on your DeFi adventures and lots of fun.
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