Cryptocurrency trading for institutional investors like hedge funds and pension funds is now possible in Germany, thanks to a partnership between German securities trading bank, VPE WertpapierhandelsBank AG, and Berlin fintech company solarisBank.
VPE is now the first securities trading bank to offer institutional cryptocurrency trading in Germany.
“Cryptocurrencies such as Bitcoin, Litecoin, Ethereum and others have become a promising asset class in recent years,” Katharina Strenski, a rep for VPE, said in a statement.
“To date, trading digital tokens has been restricted to crypto exchanges and online market places. We are pleased to be the first German bank to offer our customers cryptocurrency trading services.”
Germany is allowing institutional investors to trade crypto. (Image: Pixabay)
VPE is regulated by Germany’s financial watchdog, BaFin. VPE’s cryptocurrency trading account is held in escrow by solarisBank, but customers can access their individual crypto wallets hosted by VPE.
Institutional Investors Are Intrigued
The move to enable institutional trading of cryptocurrencies in Germany spotlights the growing mainstream penetration of the budding digital asset class.
Unlike stocks, crypto trading is dominated by individual investors. But as the market has mushroomed during the past year — fueled largely by bitcoin’s meteoric price spikes — institutional investors have been clamoring to get in on the action.
“Until now, institutional investors have faced high entry barriers to crypto trading,” said VPE. “Our cryptocurrency trading services offer a much more convenient alternative.”
Market analysts say it is inevitable that institutional investors sitting on billions of dollars in assets will eventually hop on the crypto bandwagon, as BTCManager has reported.
“I do think it’s inevitable from a few angles,” said Ari Paul, the chief investment officer of crypto investment firm BlockTower Capital. Paul was the former portfolio manager of the University of Chicago, which has an endowment of $7.8 billion. He said university endowments and pension funds began researching crypto as investment vehicles starting in 2015.
They haven’t jumped in yet because no one wants to be the first to pull the trigger, but as soon as one does, the others will follow. Paul and other financial experts say it’s only a matter of time before institutional money starts pouring into crypto because bitcoin has become too big to ignore.
Bitcoin Bulls: Crypto Will Win
Ari Paul’s outlook echoed the sentiments of former JPMorgan banker Daniel Masters, who’s now the CEO of digital investment bank CoinShares. Masters said big banks have been sniping at cryptocurrency startups because they feel threatened by the rising newcomers, as BTCManager previously reported.
“There’s something of a trench warfare going on between what I call analogue financial services companies and digital financial services companies,” Masters said. “[Banks] have gone from dismissive to unified in their resistance. Why? Why is something they ridiculed three months ago now something they feel the need to unite against and try and kill?”
Masters and other former investment bankers say traditional finance has become so bogged down in regulations that the space has become dull and staid. In contrast, the decentralized, mostly unregulated crypto ecosystem is fresh, exciting, and innovative.
When all is said and done, Daniel Masters and others predict that the cryptocurrency market will become “much bigger” than it is today.
Crypto evangelists say the virtual currency market will follow the path outlined in a quote often attributed to activist Mahatma Gandhi:
“First they ignore you. Then they laugh at you. Then they fight you, and then you win.”