- New German legislation will allow investors to move a large chunk of their portfolios on cryptocurrencies.
- After the promulgation of the new law, the cryptocurrency market can expect inflows of up to EUR 350 billion, according to experts.
- Stablecoins have received a nod of approval from a top-ranking official of the Federal Reserve.
- In other news, CBDCs are picking up pace and the Bank of France urges regulatory agencies to draw up a framework for the regulation of CBDCs.
The cryptocurrency sector is awash with bullish sentiments following a wave of positive reports from Germany, especially with the passage of a new law that gives further legitimacy to cryptocurrencies. The new law is set to come into operation on July 1st, 2021, and is poised to stimulate further inflow of funds into crypto markets.
Across the Atlantic, bulls are rubbing their hands in delight after the Fed vice chair gave a nod of approval to privately issued stablecoins, stating that the benefits of CBDCs are unclear.
Fund Location Act – The Blinding Bright Future for Cryptocurrencies
A new piece of German legislation is set to begin operation on July 1st, 2021. The law, christened the ‘Fund Allocation Act’, will allow domestic special funds to assign a portion of their portfolios to cryptocurrencies.
The law specifically authorizes the funds to invest up to 20% of their portfolios on crypto-assets like Bitcoin and Ethereum. Aside from the massive influx of funds that will flow into the ecosystem, the legitimacy that this new law gives to cryptocurrencies as an asset class has sparked excitement amongst cryptocurrency enthusiasts.
According to Sven Hildebrandt, head of Distributed Ledger Consulting suggests that the number of funds that would seep into the markets could be in the region of EUR 350 billion.
Big Win for Stablecoins
The Federal Reserve has had a turbulent relationship with cryptocurrencies in the past and the Federal Reserve’s Vice Chairman for Supervision, Randal Quarles has stated that there is no need for the Feds “to fear stablecoins”
Quarles cited historical antecedents of private sector innovation which was largely supported by the Federal Reserve. Speaking on the benefits that stablecoins pose, Quarles noted that “they may facilitate faster and cheaper cross-border payments.”
During the 113th Annual Utah Bankers Association Convention, Quarles also extolled the benefits of stablecoins and expressed doubts over the issuance of CBDCs.
He stated that while experts have called for the issuance of CBDCs, “the potential benefits are unclear” and could be a target for cybercriminals. He further added that a digital dollar could undermine the structure of the banking industry.
On the Flipside
- Billy Markus, the co-founder of Dogecoin, declared that in cryptocurrencies, “nothing is 100% safe.“
- His comments are coming on the heels of a cyberattack on SafeDollar, a stablecoin.
Time is Running Out for Regulatory Agencies
According to Francois Villeroy de Galhau, the governor of the Bank of France, Europe is running out of time for the regulation of cryptocurrencies.
He made these comments at the Paris Europlace Financial Conference saying that the continent had only “one or two years left” or face the risk of a weakened euro.
He urged the European Union to act in a timely manner and create a regulatory framework as soon as possible to compete favourably with the growing influence of cryptocurrencies.
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