ZURICH, 7 October 2024 – 21Shares AG ("21Shares"), one of the world’s largest issuers of crypto exchange-traded products (ETPs), is urging the European Securities and Markets Authority (ESMA) to create a unified regulatory framework for including crypto assets in UCITS (Undertakings for Collective Investment in Transferable Securities) funds. This move would provide much-needed clarity for retail and institutional investors across Europe.
As it stands, the rules around including crypto assets in UCITS funds are inconsistent across Europe. There are UCITS holding crypto in countries like Germany and Malta, while in others countries, like Luxembourg and Ireland, this is not the case. These discrepancies create confusion, making it difficult for investors to understand and compare their options. The lack of a common approach can lead to gaps in investor protection, as investors have to access the asset through other means, often more expensive and less professionally managed.
21Shares believes that ESMA should establish clear, consistent guidelines around indirect exposure to crypto assets that apply across all EU member states. This would ensure a high level of protection for investors. Direct investment in cryptocurrency is nuanced for institutional investors and UCITS funds, while crypto ETPs, traded like securities, offer a seamless option without the need for additional setup.
A unified framework would align Europe with other major markets, such as the US and Hong Kong, which have already approved Bitcoin and Ethereum exchange-traded funds (ETFs).
Mandy Chiu, Head of Financial Product Development at 21Shares said,
“The current patchwork of regulations is creating confusion and preventing retail investors from accessing the full potential of crypto assets. 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. At 21Shares, we focus on making crypto products easier, safer, and more conventional to trade—meeting the growing demand from investors who want to include these assets in their strategies.”
“With a unified regulatory stance, Europe can position itself at the forefront of financial innovation. Clear guidance from ESMA would not only promote market stability and investor protection but also encourage further growth and development in the crypto asset space. We believe it’s time to move forward and provide a framework that aligns with Europe’s tradition of supporting innovation and competitive markets.”
The crypto market is maturing, with higher levels of transparency and liquidity now comparable to other traditional financial instruments. Major global exchanges and custodians now offer robust data and safeguards, which reduce risks like hacking and market manipulation.
By including crypto assets through regulated ETPs, UCITS funds can provide a cost-effective and efficient way to gain exposure to these assets.
21Shares also highlights the importance of acting swiftly to avoid falling behind other global markets. With major jurisdictions like the US and Hong Kong already recognising and regulating crypto ETFs, Europe must move quickly to stay competitive and prevent investors from turning to less-regulated alternatives.
Notes to Editors:
- ESMA launched its Call for Evidence on the review of the UCITS Eligible Assets Directive on 7 May 2024. The consultation, which closed on 7 August 2024, sought input from industry stakeholders, including fund managers, institutional investors, and trade associations, on whether the current rules should be updated to include, among others, crypto assets and ETPs as eligible investments within UCITS funds. ESMA is now considering the feedback received to develop a balanced and informed approach to potential regulatory changes.
- The UCITS Eligible Assets Directive (EAD) dates back to 2007. Since then, the financial markets have evolved considerably and more assets classes have emerged. Market participants and regulators have taken different views and approaches over the years, leading to confusion and fragmentation. In June 2023, the European Commission mandated ESMA to carry out a review of the EAD and provide recommendations.
- 21Shares is one of the world’s first and largest issuers of crypto exchange-traded products (ETPs), offering a regulated and accessible way for institutional investors to gain exposure to digital assets like Bitcoin, Ethereum, and other leading cryptocurrencies. Launched in 2018, 21Shares created the first physically-backed crypto ETP, and today manages over $3 billion in assets globally.
- 21Shares’ product suite includes more than 40 ETPs listed on more than 11 different exchanges worldwide, designed to provide institutional investors with easy access to the crypto market while ensuring compliance with strict regulatory standards. 21Shares is dedicated to building bridges between traditional finance and the evolving world of digital assets, ensuring that its products are simple and transparent for all investors.
For further information, please contact:
Audrey Belloff, Head of Communications
Phone: +1 (631) 455-2220
Email: audrey.belloff@21.co
