21Shares, a provider of cryptocurrency exchange-traded products (ETPs), is advocating for the establishment of a cohesive regulatory framework within the European Union for the integration of crypto assets into investment offerings. On October 7, the firm reached out to the European Securities and Markets Authority (ESMA), proposing updates to regulations under the Undertakings for Collective Investment in Transferable Securities (UCITS) to allow retail investment vehicles such as ETPs and exchange-traded funds (ETFs) to include cryptocurrencies.
Current regulations across EU member states regarding the inclusion of crypto in such investment vehicles are inconsistent and vary significantly. For example, while nations like Germany and Malta permit UCITS funds to hold digital currencies, countries such as Luxembourg and Ireland do not extend the same allowance. 21Shares pointed out that this regulatory disarray leads to confusion for investors and hampers the growth of the crypto investment market.
The company argues that a unified regulatory approach at the EU level would enhance clarity, provide greater investor protections, and bring Europe’s regulatory framework in line with established markets like the United States and Hong Kong. The firm emphasized that a consistent set of rules would not only facilitate the entry of retail investors into the digital asset space but also enhance portfolio diversification in a secure investment environment.
To support this initiative, 21Shares recommends that ESMA develop clear guidelines for indirect exposure to cryptocurrencies via ETPs, which function like traditional securities. In May, ESMA commenced a consultation process to review the eligible assets for UCITS, gathering feedback until early August to help inform potential regulatory modifications.
With over 40 ETPs listed across 11 exchanges, 21Shares is a prominent player in the crypto investment space. Its collaboration on a spot Bitcoin ETF with ARK Invest has attracted $2.64 billion in assets, making it the fourth-largest such fund in the U.S. by assets under management.
