21Shares Urges Europe’s Financial Watchdog To Integrate Crypto Into UCITS Framework

21Shares has called on the European Securities and Market Authority (ESMA) to develop a regulatory framework for including cryptocurrency assets under the UCITS (Undertakings for the Collective Investment in Transferable Securities) framework.

In a press release, the crypto exchange-traded product (ETP) issuer highlighted inconsistencies in current regulations across Europe, which it says create confusion for investors.

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Regulators Interpret Rules Differently

The appeal comes in response to ESMA’s review of the UCITS Eligible Assets Directive. 21Shares emphasized that national regulators interpret rules regarding crypto assets in UCITS funds differently, leading to a fragmented regulatory landscape.

For instance, Germany’s BaFin permits UCITS funds to purchase crypto exchange-traded notes (ETNs), whereas Spain’s Comisión Nacional del Mercado de Valores (CNMV) allows such exposure only if the products do not involve derivatives.

21Shares urged ESMA to implement “clear, consistent guidelines” for indirect access to cryptocurrency across all member states.

The European Union was established with the goal of resolving issues related to harmonization. So many years later, Europe still hasn't solved that problem.

I'm sorry to say this, but if Europe doesn't do something about it soon (and it's not just about crypto!), it's doomed.

— Mladen (@mladenpavla1) October 8, 2024

According to the company, a lack of uniformity in rules has led investors to seek out costlier, less professionally managed crypto investments due to regulatory uncertainty.

“The current patchwork of regulations is creating confusion and preventing retail investors from accessing the full potential of crypto assets,” Mandy Chiu, head of financial product development at 21Shares, said.

“By providing a consistent set of rules across Europe, ESMA could open up new avenues for investors to diversify and enhance their portfolios in a regulated environment that is designed for investor protection.”

Chiu also noted that a unified stance could position Europe as a leader in financial innovation, offering both market stability and investor protection while fostering growth in the crypto asset sector.

In May, ESMA initiated a consultation to clarify the eligibility of financial instruments for inclusion in UCITS, including crypto assets. However, the European Fund and Asset Management Association (EFAMA) expressed skepticism about the review leading to a significant expansion of asset classes for ETFs.

EFAMA’s response suggested that while updated guidelines could improve regulatory consistency, the issue of including crypto assets is complex and requires careful consideration to preserve the integrity of the UCITS brand.

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21.co Partners With Crypto.com To Boost Liquidity For Wrapped Tokens

The recent call for regulatory clarity from 21Shares comes shortly after its parent company, 21.co, partnered with Crypto.com to improve the liquidity and custody of its wrapped digital assets, including its flagship 21.co Wrapped Bitcoin (21BTC).

As reported, the collaboration will enable 21.co to tap into Crypto.com’s robust liquidity, competitive fee structure, and advanced matching engine to strengthen the liquidity of 21BTC.

Founded in 2018 by Hany Rashwan and Ophelia Snyder, 21.co is known for offering crypto exchange-traded products (ETPs) through its affiliate, 21Shares. It also provides blockchain infrastructure technology.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.