Expert: Impact on super US spot ETFs! The EU plans to include cryptocurrencies in the 12 trillion euro investment market!

The EU securities regulator, the European Securities and Markets Authority (ESMA), solicited opinions from the industry and experts on the 7th, asking whether crypto assets should be included in UCITS (EU Collective Investment in Transferable Securities) As the UCITS market size reaches 12 trillion euros, this means that this move is expected to open up a wider market for cryptocurrencies.

The European Union Collective Investment Scheme for Collective Investment in Transferable Securities (UCITS, Undertakings for Collective Investment in Transformable Securities) is the European Union’s fund management code, designed to regulate funds operating within the European Union. UCITS funds must comply with a series of strict regulations Requirements include that fund holdings must not be too concentrated.

The deadline for ESMA to solicit opinions from stakeholders is August 7. DLNews reported that financial regulatory expert Sean Tuffy said that if ESMA is convinced, this will be a key step towards the mainstreaming of crypto assets in Europe. The potential to subvert traditional game rules.

Andrea Pantaleo, a lawyer who specializes in cryptocurrency regulation and litigation, said that the impact will be more significant than through cryptocurrency spot ETFs in the United States, because there may be many fund sectors interested in investing a small part of the liquidity in crypto assets superior.

Inclusion in UCITS will be more liquid

DLNews pointed out that if crypto assets can be included in the UCITS framework, there will be multiple benefits. First, the UCITS framework covers many different categories of funds. These funds are based on Its risks and characteristics will allocate different asset portfolios.

The inclusion of crypto assets in this framework can also benefit cryptocurrencies in another way. Andrea Pantaleo pointed out that every time a fund invests in crypto assets, it will no longer have to seek authorization, which will facilitate market flow. sex.

In the United States, ETFs are based on a single asset class and require regulatory approval, but in Europe, UCITS investment funds can allocate liquidity to more crypto assets without obtaining separate authorization for each asset in advance. Andrea Pantaleo explained: UCITS funds have specific investment restrictions depending on the asset class. We will not see 100% cryptocurrency UCITS funds, but hopefully many investment funds can allocate 1-2% of their liquidity in cryptocurrencies. middle.

While investors can already trade Bitcoin exchange-traded products (ETPs) in the EU, they are not as popular as their U.S. ETF counterparts.

Custody issues are an obstacle

However, there may still be a long way to go before crypto assets are included in the UCITS framework. Andrea Pantaleo believes that the only problem may be custody. The custody bank supervision of funds should be consistent with the custody of crypto assets.

The EU Crypto Asset Market Law "MiCA" will take effect in June this year. For cryptocurrency custodians, MiCA stipulates asset isolation and custody policies and guidelines. Crypto assets included in UCITS may also need to comply with the same specifications.

To this end, ESMA has also specifically solicited opinions from stakeholders on what impact the inclusion of specific cryptocurrencies in the framework under MiCA will or will not have.

Sean Tuffy said that the process of updating UCITS eligible asset rules is not very fast and will involve a lot of negotiations. There is still a long way to go before knowing whether cryptocurrencies will be allowed to be included in UCITS.

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