Crypto exchange-traded product (ETP) provider 21Shares is advocating for clearer and more consistent regulations across the European Union (EU) concerning crypto investment products. The company argues that the EU’s current approach is fragmented, leading to confusion for investors.
21Shares Pushes for Regulatory Clarity
On October 7, 21Shares appealed to the European Securities and Markets Authority (ESMA) to modify its rules, allowing crypto assets in Undertakings for Collective Investment in Transferable Securities (UCITS) funds. These funds, which include ETPs and exchange-traded funds (ETFs), are designed specifically for retail investors.
The company claims that the existing regulations are inconsistent across EU member states. For example:
- Germany and Malta: Permit UCITS funds to hold crypto assets.
- Luxembourg and Ireland: Do not allow these funds to include crypto.
This lack of uniformity creates confusion and presents challenges for investors, according to 21Shares.
Benefits of a Unified Framework
21Shares argues that establishing a unified regulatory framework would have several benefits:
- Clarity and Consistency: A standardized approach would make it easier for both retail and institutional investors to navigate the market.
- Investor Protection: Consistent rules across the EU would ensure that protections are in place for all investors, regardless of their location.
- Global Alignment: Harmonizing EU regulations with those of other major markets, such as the United States and Hong Kong, would help keep Europe competitive.
Mandy Chiu, the head of financial product development at 21Shares, described the current regulatory landscape as a “patchwork.” She emphasized that this inconsistency hinders retail investors’ access to digital 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 designed for investor protection,” Chiu added.
Recommendations and ESMA’s Response
21Shares suggested that ESMA develop clear guidelines for offering indirect exposure to crypto assets through ETPs, treating them similarly to other regulated securities. This would provide clarity and structure, allowing investors to confidently access digital assets within a regulated environment.
In May, ESMA initiated a public consultation to review eligible assets for UCITS, which concluded on August 7. The regulatory body is currently reviewing the feedback and considering updates to its regulatory framework.
21Shares’ Market Presence
21Shares is a significant player in the crypto ETP market, offering over 40 ETPs listed across 11 exchanges. In collaboration with ARK Invest, the company manages a US-based spot Bitcoin ETF valued at $2.64 billion in assets under management (AUM). This makes it the fourth-largest spot Bitcoin ETF in the US, trailing only behind funds from BlackRock, Grayscale, and Fidelity.
