21Shares urges the EU regulator to allow crypto ETFs across the bloc

What’s new? Investment firm 21Shares has called on the European Securities and Markets Authority (ESMA) to adjust the regulation of exchange-traded products (ETPs) available to retail investors to include cryptocurrencies. Currently, there are no uniform rules on the use of cryptocurrencies in such investment funds across the bloc, leading to confusion, the company noted.

The company’s appeal

What else is known? ESMA is designated as the EU-wide regulator of the crypto sector under the new Markets in Crypto-Assets (MiCA) regulation. 21Shares’ request relates to ETPs and exchange-traded funds (ETFs), which are regulated under the Undertakings for Collective Investment in Transferable Securities Directive (UCITS) 2009/65/EC

The company noted that there are no uniform rules across the bloc regarding the ability of such funds to hold cryptocurrencies. For example, Germany and Malta allow UCITS funds to hold cryptocurrency, while Luxembourg and Ireland prohibit it.

21Shares argues that a single EU system will provide clarity for retail and institutional investors, and offer protection and new opportunities to diversify portfolios in a regulated environment. It will also unite Europe with other markets such as the US and Hong Kong, where the use of cryptocurrencies in ETPs and ETFs is permitted.

ETPs and ETFs provide investors with indirect access to crypto assets, their units are traded on stock exchanges as securities. Issuers hold real cryptocurrency to back the securities.

Between May and August, ESMA consulted on the types of assets that are suitable for inclusion in UTICS. The regulator is currently reviewing the comments received to develop amendments to the regulatory framework.

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As for 21Shares, the company offers more than 40 ETPs on 11 exchanges. Its spot bitcoin ETF, launched in partnership with investment firm ARK Invest under the ticker ARKB in the US, manages $2,64 billion in assets. It is the fourth-largest spot bitcoin ETF by assets under management in the United States, after BlackRock’s IBIT, Grayscale’s GBTC, and FBTC Fidelity funds.