EU Regulators Consider Approving Bitcoin for UCITS Products
The EU’s financial watchdog, the European Securities and Markets Authority (ESMA), is considering whether to allow Bitcoin into the region’s €12 trillion mutual fund market.
Just arrived: 🇪🇺 EU securities authorities are exploring additions. #Bitcoin €12T Cryptocurrency exposure to the investment market.
The EU is getting ready 🙌 pic.twitter.com/kVYZrrEFCx
— Bitcoin Magazine (@BitcoinMagazine) May 9, 2024
ESMA seeks feedback on expanding the eligible assets of collective investment schemes in transferable securities (UCITS). These mainstream retail investment products make up more than 75% of funds held by EU citizens.
If Bitcoin is approved for UCITS, it will be the first in Europe to gain mainstream access, meaning fund managers will be able to allocate small portfolios to Bitcoin within a larger framework.
ESMA is gathering comments until August 7 before making recommendations. The move follows the approval of Bitcoin ETFs in the US and Hong Kong, which signaled a warmer global regulatory attitude globally.
Nonetheless, hurdles remain when it comes to storing Bitcoin under existing EU regulations. Rules such as the upcoming Markets in Cryptocurrency Assets (MiCA) bill may require adjustments to asset segregation.
Nonetheless, ESMA’s proactive approach recognizes Bitcoin’s growing relevance across Europe.
Attorney Andrea Pantaleo says this impact could erode the recent Bitcoin ETF launch. Although these products are focused on Bitcoin, UCITS consists of a variety of fund types with different asset allocations.
Therefore, approval does not necessarily create standalone Bitcoin funds. However, trillions of dollars of UCITS can be unlocked for modest Bitcoin exposure.
This could be a huge help to liquidity while encouraging EU adoption. However, given the stringent EU standards, there is a long way to go before Bitcoin is included.
