The European Securities and Markets Authority (ESMA) is seeking opinions from various stakeholders, including industry and experts, to decide whether eligible assets for Undertakings for Collective Investment in Transferable Securities (UCITS) should be expanded to include cryptocurrencies, catastrophe bonds, carbon emissions quotas and other asset classes. Considering the market size of UCITS is 12 trillion euros, this initiative may allow cryptocurrencies to enter a larger market than the US Bitcoin ETF.
UCITS aims to provide a safe and efficient European-wide market for collective investment products, allowing various fund products to flow freely among EU member states without the need to register separately in each country.
UCITS funds follow a set of strict management and investment restriction rules, including requirements for liquidity, leverage, investment diversification and risk management. These rules ensure a high level of transparency and security of the funds and are designed to protect the interests of investors. Therefore, UCITS funds are generally regarded as investment vehicles suitable for a wide range of general investors. They can invest in stocks, bonds, cash market instruments and other permitted assets.
Financial regulation expert Sean Tuffy told DL News that this is a potentially disruptive upside.
“If ESMA is convinced, this will be the final step towards mainstreaming crypto-assets in Europe.”
On the other hand, Andrea Pantaleo, a lawyer who specializes in cryptocurrency regulations and litigation, said that the impact of cryptocurrency being included in UCITS will be more significant than that of U.S. ETFs, because there may be many funds willing to invest small amounts in crypto assets. Liquidity. In addition, the U.S. Bitcoin Spot ETF is based on a single asset, so the fund needs to obtain regulatory authorization when investing, but UCITS investments are composed of many different categories of funds, so authorization is not required every time the fund invests in crypto assets, which will also be beneficial. on market liquidity.
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