The European Securities and Markets Authority (ESMA), the EU’s key financial regulator, recently issued a Call for Evidence to review the Undertakings for Collective Investment in Transferable Securities (UCITS) Eligible Assets Directive (EAD). The aim is to assess the risks and benefits associated with allowing UCITS to include various asset classes, including cryptocurrencies, in their portfolios.

ESMA has invited feedback from various stakeholders including investors, UCITS management companies, and trade associations. They are asked to share insights on market practices and practical issues regarding the eligibility criteria and provisions of the UCITS EAD. This comprehensive feedback will play a crucial role in shaping the future market practices and integration of cryptocurrencies into the EU’s financial landscape.

Is BTC and ETH Facing a New ATH?

According to a tweet from Bitcoin Magazine, the EU is considering adding cryptocurrency exposure to its €12 trillion investment market, potentially allowing Bitcoin and other cryptocurrencies into the region’s mutual fund market.

JUST IN: EU Securities Authority is exploring adding #Bitcoin and Crypto exposure to the €12T investment market.

EU is gearing up pic.twitter.com/kVYZrrEFCx

— Bitcoin Magazine (@BitcoinMagazine) May 9, 2024

This development could considerably expand the market for cryptocurrencies, surpassing the current scope of spot Bitcoin ETFs. Legal expert Andrea Pantaleo from DLA Piper highlighted the significant impact this move could have, noting that it would provide liquidity and reduce the need for repeated authorizations for fund investments in crypto assets.

The consultation deadline set by ESMA is August 7th, 2024, with the approval process still pending. The outcome could mark a pivotal step in mainstreaming cryptocurrency assets in Europe, potentially leading to new all-time highs for Bitcoin and Ethereum.

Importance of the UCITS EAD Review

The UCITS framework is critical as it represents about 75% of all collective investments by retail investors in the EU. Known globally for its stringent regulatory standards, UCITS invests in a variety of assets, ensuring they meet strict eligibility criteria to protect investors. With the financial market’s evolving landscape, the review of the UCITS EAD is essential to maintain the integrity and efficacy of this investment vehicle, preserving investor confidence and the quality of investment options available to them.

ESMA plans to consider all feedback received by the August deadline. The insights gathered will be used to develop technical advice for the European Commission, aiming to enhance the functionality of the UCITS framework and ensure it continues to operate in the best interests of investors and the overall market.

Recent Market Update

In line with our previous CNF post on Price Wars Heat Up: European Bitcoin ETF Fees Slashed by Over 60%, as of this writing, Bitcoin (BTC) has surged by 5.40% in the past week, reaching prices of $62,823.95. This recent uptick in value further underscores the dynamic and rapidly evolving nature of the cryptocurrency market.