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Cryptocurrency News Articles
21Shares Urges ESMA to Grant Crypto Assets Unified Regulatory Status Within UCITS Funds
Oct 08, 2024 at 04:11 am
The discussion centers on reconciling discrepancies between European countries, some allowing crypto trading through UCITS funds but others not.
21Shares is urging the European Securities and Markets Authority (ESMA) to grant crypto assets a unified regulatory status within UCITS funds.
This follows discussions on the varying treatment of crypto assets in UCITS funds across Europe, with some countries permitting crypto trading through UCITS funds and others not. According to 21Shares, clear and consistent rules would protect investors and make crypto investments more accessible.
Currently, there are discrepancies in the regulatory approach to crypto assets in UCITS funds across different European countries. For instance, Germany and Malta permit UCITS funds to hold crypto assets, while Luxembourg and Ireland do not.
This disparity confuses retail and institutional investors and makes it difficult to compare investment options across the continent. Investors seeking exposure to crypto assets through UCITS funds have to resort to less professional and more costly methods due to the lack of a harmonized framework.
21Shares argues that unifying the regulatory treatment would close gaps in investor protection and subject all EU member states to the same rules. According to Mandy Chiu, Head of Financial Product Development at 21Shares,
“The current patchwork of regulations is preventing retail investors from accessing the full potential of crypto assets.”
Chiu adds that a consistent set of rules would enable more investors to diversify their portfolios safely.
21Shares is also urging ESMA to provide guidelines on indirect crypto exposure through UCITS funds, which is expected to increase. According to the firm, while institutional investors can invest directly in cryptocurrencies, exchange-traded products on crypto (ETPs) offer an easier entry point.
These products trade like securities, providing a regulated and cheap way to enter the crypto market. Clearer ESMA guidelines would benefit the market and innovation in Europe’s financial sector.
“By providing a consistent set of rules across Europe, ESMA could open up new avenues for investors to diversify and enhance their portfolios in a regulated environment that is designed for investor protection,” Chiu said.
According to 21Shares, this move would align Europe with other major markets, such as the US and Hong Kong, which already offer regulated crypto ETFs.
21Shares also warns that Europe risks being left behind by global markets that have already recognized and regulated bitcoin ETFs. According to the firm, the US and Hong Kong markets have approved Bitcoin and Ethereum ETFs, giving their investors safe access to crypto assets.
To prevent European investors from seeking out less regulated alternatives, action must be taken quickly.
Over the last few years, the crypto market has matured significantly, particularly in terms of transparency, liquidity, and protection against risks like hacking and market manipulation. Now, global exchanges provide reliable data and security measures, making crypto assets more similar to traditional financial instruments.
By including crypto in regulated UCITS funds, investors can buy this asset class on regulated platforms and at more affordable and professional terms.
According to 21Shares, if ESMA acts quickly, Europe could take the lead over other markets in financial innovation rather than falling behind. The firm also highlights the urgency behind implementing these changes, lest Europe be left trailing behind in the global crypto landscape.
21Shares urges ESMA to apply one regulatory approach across Europe to protect investors and support the markets. According to the firm, this would be in line with Europe’s tradition of fostering innovation and competitive markets.
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