According to the Financial Times, Melanion's ETF proposal received approval from French regulators who ruled that it meets key EU standards, known as Ucits, meaning it will be available in all of the union's 27 member states. The Paris-based firm's ETF has become one of the first bitcoin-related funds to receive the Ucits rating.
"I haven't seen any funds launched yet that are focused on digital assets under the Ucits umbrella," Winston Penhall, a funds lawyer at Keystone Law in London, told the Financial Times. Investors in the EU are often skeptical of putting their money into non-Ucits funds since the rating provides high levels of investor protection.
The Melanion BTC Equities Universe Ucits ETF will be equity-based rather than bitcoin-based. It will reportedly track a basket of up to 30 stocks, including mining firms Argo, Riot, HIVE, and investment firm Galaxy Digital and broker Voyager Digital. Melanion said the stocks making up the fund would have an alleged high correlation to the bitcoin market price. However, the fund won't be holding bitcoin directly.
With more and more investment vehicles targeting the digital asset sector, regulatory approval of a Bitcoin ETF remains a difficult prospect in several jurisdictions, particularly in the United States. Greg King, CEO of Osprey Funds, nevertheless recently argued that the still high number of Bitcoin ETF applications in the United States earlier this year – despite the long-standing reluctance of U.S. regulators to approve them – has contributed to the Bitcoin’s extraordinary bull run in 2021.
Regulators in most countries interpret it as meaning that digital assets cannot be held directly in a fund unless they are linked to a listed security. As a result, it is nearly impossible to launch a Ucits fund that can be sold block-wide and primarily invests in Bitcoin with safeguards for consumers.
“Most pipes in the traditional financial system stop at access to Bitcoin,” said Jade Comair, CEO of Melanion. “ETFs were a real challenge because of the sensibilities and politics surrounding Bitcoin and Bitcoin investment.”
Among the top holdings of the Melanion index, tracked by the fund and calculated by FinTech Vita of Germany, are crypto miners Argo blockchain and Riot blockchain, investment manager Galaxy Digital, led by entrepreneur Mike Novogratz, brokers. There are stocks such as Voyager Digital. Stocks are weighted based on how sensitive they are to Bitcoin price movements.
“We are aware of both the significant opportunities and significant risks associated with crypto assets,” the Irish Central Bank said last year. However, EU regulator Esma said in March this year that “some crypto assets are very risky” and that most are not regulated in the EU.
There are many exchange-traded funds and products that track Bitcoin, such as the $ 242 million Wisdom Bitcoin ETP. They are regulated as securities, but there is no coveted Ucits wrapper.
In the United States, various fund companies include: Cathie Wood Arc Invest, Securities and Exchange Commission I haven’t given approval yet.
A French fund called the Melanion BTC Equities Universe Ucits ETF is listed on Euronext in Paris with a 0.75% commission
French fund manager to launch first EU-regulated bitcoin tracker Source link French fund manager to launch first EU-regulated bitcoin tracker.
The launch highlights how fund firms are becoming increasingly creative in the face of financial regulators who are often sceptical or slow-moving when it comes to the fast-evolving world of digital assets.
“I haven’t seen any funds launched yet that are focused on digital assets under the Ucits umbrella,” said Winston Penhall, a funds lawyer at Keystone Law in London. How regulators view bitcoin and other cryptocurrencies is “all somewhat up in the air”, he added.
Ucits funds, which are sold across the EU and are also popular in Asia and Latin America, are seen as an international gold standard of fund regulation. They form the bulk of European mutual funds and offer high levels of investor protections. But their rules were first established more than 30 years ago and do not directly address cryptocurrencies like bitcoin.
Most national regulators interpret the rules to mean digital assets cannot be directly held in funds, unless they are linked to listed securities. That makes it almost impossible to launch a Ucits fund investing predominantly in bitcoin that can be sold across the bloc and come with safeguards for consumers.