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 The European Fund and Asset Management Association (EFAMA) has stated that a significant expansion of asset classes, including cryptocurrencies, is unlikely following the recent review of UCITS-eligible assets, according to a<a style="color: #0000ff;" href="https://www.etfstream.com/articles/esma-launches-review-of-ucits-eligible-assets" rel="noopener noreferrer nofollow"> new report from ETF Stream</a>.
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UCITS (short for Undertakings for Collective Investment in Transferable Securities) is a European regulatory framework for managing and marketing investment funds, including mutual funds and ETFs. Designed to protect investors, UCITS also facilitates the cross-border sale of these funds throughout Europe.
According to ETF Stream, discrepancies in how European countries interpret these rules have prompted the<a href="https://www.etfstream.com/articles/esma-launches-review-of-ucits-eligible-assets" rel="noopener noreferrer nofollow"> European Securities and Markets Authority (ESMA) to review and reassess the regulations in May 2024</a>. The consultation initially sparked hopes for including new asset classes like cryptocurrencies and commodities under the UCITS framework.
However, Federico Cupelli, EFAMA’s deputy director for regulatory policy, downplayed these prospects.
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 “I don’t foresee a wave of new asset classes for ETFs. Any expansion will likely be gradual and only occur if key supervisors are comfortable with a less stringent ‘look-through’ approach for certain underlying assets, such as physical commodities,”
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Cupelli told ETF Stream.
Meanwhile, the EFAMA reportedly released a statement in response to the ESMA’s review asserting that a major overhaul of UCITS rules is currently unnecessary. However, the association emphasized that clearer, EU-wide guidelines would help ensure consistent interpretation and application of these rules across different European countries.
The agency considers making cryptocurrencies too UCITS eligible was “too broad and nuanced a topic” to be fully addressed in the consultation. The association suggests that indirect access through exchange-traded products (ETPs) is a more straightforward approach as it avoids the complexities and risks associated with directly holding digital assets.
Notably, cryptocurrencies, especially in the form of exchange-traded products (ETPs), have become a key focus in the ongoing UCITS review. Their growing<a style="color: #0000ff;" href="https://www.globenewswire.com/news-release/2024/07/10/2910872/0/en/21Shares-Expands-its-European-Lineup-with-the-Launch-of-Three-Innovative-Physically-Backed-Crypto-ETPs-on-Euronext-Paris-and-Euronext-Amsterdam.html#" rel="noopener noreferrer nofollow"> popularity</a> across Europe and the recent<a style="color: #0000ff;" href="https://www.reuters.com/technology/spot-bitcoin-etfs-start-trading-big-boost-crypto-industry-2024-01-11/" rel="noopener noreferrer nofollow"> approval</a> of spot Bitcoin ETFs in the US have fueled the debate over whether these digital assets should be included in the UCITS framework.
Notably, the UK Law Commission<a href="https://defi-planet.com/2024/07/uk-law-commission-recommends-legal-reform-to-include-crypto-assets-as-a-new-property-class/" rel="noopener noreferrer nofollow"> recommends</a> reforming property law to include crypto assets as a new category. The current classification of property under English law—tangible and intangible—is inadequate for digital assets like cryptocurrencies and NFTs, which blur the lines between physical and non-physical properties, complicating legal disputes.
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The post <a href="https://defi-planet.com/2024/08/efama-rules-out-quick-expansion-of-etfs-to-include-crypto-following-ucits-review/" rel="noopener noreferrer nofollow">EFAMA Rules Out Quick Expansion of ETFs to Include Crypto Following UCITS Review</a> appeared first on <a href="https://defi-planet.com" rel="noopener noreferrer nofollow">DeFi Planet</a>.

EFAMA Rules Out Quick Expansion of ETFs to Include Crypto Following UCITS Review

DeFi Planet

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