European regulators consider cryptocurrency’s inclusion in euro 12 trillion investment market

The European Union’s security authority, the ESMA, is aggressively considering incorporating cryptocurrencies into the massive €12 trillion financial product market. To gather information, the ESMA has contacted industry experts to inquire whether Undertakings for Collective Investment in Transferable Securities (UCITS) can include a variety of asset classes, such as crypto assets, commodities, structured loans, emission allowances, catastrophe bonds, and unlisted stocks.

UCITS are investment funds that aim to simplify and protect investment transactions. They include mutual funds, exchange-traded funds, and money market funds. While these funds are subject to EU laws, non-EU investors can also invest in them. Unlike strictly crypto-focused spot BTC ETFs, UCITS investments include a wide range of fund types, each with its own asset allocation depending on the risk profile. If legalized, it is unlikely that independent UCITS funds will allocate 100% of their assets to cryptocurrencies. Instead, numerous UCITS funds would likely have a proportion allocation to crypto assets.

This decision by ESMA corresponds with the recent acceptance of spot Bitcoin exchange-traded funds (ETFs) in the United States and Hong Kong. It appears that regulators throughout the world are increasingly becoming more open to putting cryptocurrency exposure into regular investment vehicles. stakeholders involved with UCITS have until August 7 to submit feedback. If authorized, the inclusion of crypto assets under UCITS would be a big step forward, possibly positioning them as one of the largest mainstream investment vehicles having exposure to cryptocurrencies.

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