According to a statement on October 7th, crypto investment firm 21Shares has asked the European Securities and Markets Authority (ESMA) to issue standardized regulations for the inclusion of cryptocurrencies in UCITS (collective investments in transferable securities) funds. asked to be established.
The company said the current approach lacks consistency and is causing confusion for retail and institutional investors across Europe. It noted that some countries, such as Germany and Malta, allow the inclusion of cryptocurrencies in UCITS funds, while others, such as Luxembourg and Ireland, do not.
Mandy Chiu, head of financial product development, explained that this fragmented approach limits the ability of retail investors to take full advantage of cryptocurrencies. She added:
“By providing a consistent set of rules across Europe, ESMA could open new avenues for investors to diversify and strengthen their portfolios in a regulatory environment aimed at protecting investors.”
Chiu further pointed out that clear and consistent rules will help stabilize the market while promoting the growth of the crypto sector.
The company therefore called on ESMA to develop comprehensive guidelines that would allow indirect exposure to cryptocurrencies in all EU member states. According to 21Shares, this will protect investors and expand access to crypto investments.
Of note are efforts at regulatory clarity as ESMA considers feedback from a recent consultation on the inclusion of new asset classes such as cryptocurrencies in UCITS funds.
Gradual introduction of MiCA
The request from 21Shares is in line with the European Union's gradual implementation of the Market in Crypto Assets (MiCA) regulation.
MiCA sets a precedent as the EU becomes the first major region to have a comprehensive legal framework for cryptocurrencies. This regulation establishes a uniform digital asset rulebook that balances user protection and fostering innovation within the region.
Under MiCA, cryptocurrency service providers must secure authorization from one of the EU's national financial regulators to operate within the EU.
This regulation is already impacting the stablecoin space. Some companies, including Coinbase, have announced plans to delist stablecoins that do not meet EU regulatory requirements by the end of 2024. While crypto exchanges have begun adopting policies in line with MiCA guidelines, funds lack such clarity.
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