The European Securities and Markets Authority (ESMA), the EU's financial watchdog, is reviewing whether to allow bitcoin to enter the region's €12 trillion mutual fund market.
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ONLY IN: EU Securities Authority exploring adding twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw”>#bitcoin and exposure to cryptocurrencies in the €12 trillion investment market.
The EU is preparing pic.twitter.com/kVYZrrEFCx
– bitcoin Magazine (@BitcoinMagazine) twitter.com/BitcoinMagazine/status/1788528162801889453?ref_src=twsrc%5Etfw”>May 9, 2024
ESMA seek feedback on the expansion of eligible assets for Undertakings for Collective Investment in Transferable Securities (UCITS). These leading retail investment products account for more than 75% of funds held by EU citizens.
If bitcoin is approved for UCITS, it would allow the first widespread access in Europe, meaning fund managers could allocate small portfolios to bitcoin within the massive framework.
ESMA is collecting opinions until August 7 before making recommendations. The move follows bitcoin ETF approvals in the US and Hong Kong, which have signaled an increasingly warm global regulatory attitude.
Still, obstacles remain regarding bitcoin custody under existing EU regulations. Regulations such as the upcoming Cryptoasset Markets Legislation (MiCA) may require coordination on asset segregation.
However, ESMA's proactive approach recognizes the growing relevance of bitcoin across Europe.
Lawyer Andrea Pantaleo crypto-could-access-ucits-market-after-esma-move/”>state The impact could overshadow recent bitcoin ETF launches. While those products focus on bitcoin, UCITS comprise various types of funds with different asset allocations.
Therefore, approval would not necessarily create independent bitcoin funds. But it would unlock the trillions in UCITS for modest exposure to bitcoin.
This could significantly benefit liquidity while encouraging EU adoption. However, there is still a long way to go before bitcoin's inclusion, given the strict EU standards.
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