Paris-based fund manager gets green light for EU-regulated Bitcoin ETF
The European Union has approved a French fund manager’s filing for an exchange-traded fund [ETF] which will track Bitcoin‘s price closely. This will make Melanion Capital among the first companies to offer the world’s largest cryptocurrency through mutual funds in Europe, as per reports.
This approval was sought after the company agreed to comply with EU Standards known as Ucits [Undertakings for the Collective Investment in Transferable Securities]. These are popular across Asia and Latin America and are widely seen as an international gold standard for funds regulation. However, like other mainstream guidelines for financial silo, Ucits rules are 30 years old and were not originally meant to regulate cryptocurrencies and Bitcoin.
Ergo, many countries are maintaining some distance from cryptos unless they are linked to listed securities. This makes it nearly impossible to launch a Ucits fund investing majorly in Bitcoin, one which can be sold across Europe with safety.
Nevertheless, Melanion will be tracking 30 stocks in sectors of crypto-mining and blockchain technology. These will be nearly 90% correlated to the price of Bitcoin.
Bitcoin’s price has been forming several crests and troughs in the market. This has been the case not only due to the bearish market, but also due to the exodus of mining activity. As Bitcoin’s hash rate recovers, the price may follow its lead. BTC’s press time value seemed to be painting an entry position for big buyers like institutions. No surprise then that many traditional finance vehicles do not want to miss out on the opportunity.
According to the Melanion CEO Jad Comair,
“Most pipes of the traditional financial system stop at access to bitcoin. The ETF was a real challenge because of the sensibilities and politics currently surrounding bitcoin and bitcoin investing.”
Among its list of top 30 stocks, the company’s index will track crypto-miners like Argo Blockchain and Riot Blockchain, along with investment management firm Galaxy Digital and broker Voyager Digital. The fund will be listed on Euronext in Paris, charging a fee of 0.75%.
While institutions in the EU progress with Bitcoin ETFs, the situation in the U.S has been stagnant. The SEC made claims of approving a Bitcoin ETF in the future, but only with stringent rules. What these rules are, will be a discussion for tomorrow. But for now, many institutions are lining up before the SEC, with the latest addition being Victory Capital.