Cryptocurrencies like Bitcoin (BTC) are being considered for integration into the extensive investing environment in the European Union by the European Securities and Markets Authority (ESMA).
Regarding this matter, the relevant body is concentrating on potential UCITS that have the ability to diversify their holdings to include cryptocurrency and other asset classes.
The European Securities and Markets Authority began consulting with professionals in the field on the potential effects and practicality of incorporating cryptocurrency into unregulated investment funds (UCITS) in a guideline released on May 7.
Mutual, exchange-traded, or money market funds that are subject to EU laws often make up UCITS. On the other hand, they draw investors from outside the EU who are looking to get into the European market.
The deadline for comments from interested parties is August 7. If everything goes according to plan, UCITS might soon be one of the biggest mainstream funds that invests in cryptocurrency.
Although there are products like Bitcoin exchange-traded funds (ETFs) that provide direct exposure to cryptocurrency investing, UCITS is quite different.
It is possible that UCITS investments will take a more diversified strategy, maybe including many funds with different cryptocurrency holdings, rather than a single crypto-focused fund.
Existing EU rules prevent the development of totally autonomous crypto-centric investment vehicles. Thus, such an approach will likely be in line with these regulations. If approved, the product’s effect on Bitcoin’s price is unclear; after all, the ETF launch in the US helped push BTC to a new all-time high of more than $73,000 in March 2024.
The EU has been actively striving to establish a more streamlined regulatory framework for the management of cryptocurrencies. For example, the MiCA legislation, which deals with crypto assets, was enacted by the area in 2023.
The overarching goal of the crypto measures is to encourage more investment in the area and provide more clarity to firms on their legal standing.
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