Kraken, one of the oldest cryptocurrency exchanges, is considering a final funding round ahead of a possible initial public offering (IPO) as soon as next year, according to Bloomberg. This move follows renewed interest from investors during the current digital-asset market rally and a perceived easing of U.S. regulatory scrutiny. Kraken Eyes IPO Bloomberg sources […]
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Turkey Rules out Taxes on Crypto Profits, Considers Limited Transaction Tax
Turkish Treasury and Finance Minister Mehmet Simsek has stated that there are no current plans to impose taxes on profits from cryptocurrencies. However, he mentioned that the government is considering implementing a “very limited” transaction tax on these assets, though the specifics have not been determined. This statement was made to clarify earlier reports by […]
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USDC Stablecoin Issuer Considers Moving Legal Home From Ireland to US
Circle, a stablecoin issuer based in the Republic of Ireland, has reportedly announced plans to relocate its legal domicile to the United States. The decision is believed to be a response to the Organization for Economic Cooperation and Development’s (OECD) proposal for a minimum tax of 15% on the profits of larger multinational corporations. Republic […]
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EU Regulator Considers Crypto Inclusion in €12 Trillion UCITS Funds
The European Securities and Markets Authority (ESMA) has initiated a call for evidence to explore the potential inclusion of new assets, including cryptocurrencies, in UCITS funds, which represent a major share of EU retail investments. UCITS, an acronym for Undertakings for Collective Investment in Transferable Securities, is a regulatory framework of the European Union that […]
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EU Watchdog Considers Crypto Integration Into $12.88 Trillion Investment Market
Europe’s securities regulator is seeking input from stakeholders on the potential inclusion of crypto assets in a potentially massive market. The European Securities and Markets Authority (ESMA), the regulatory authority responsible for overseeing financial markets within the European Union, has recently initiated a comprehensive review of the regulations surrounding the Undertakings for Collective Investment in Transferable Securities (UCITS) Eligible Assets Directive (EAD).
This move could potentially enable the integration of cryptocurrencies into a vast investment market valued at approximately €12 trillion (roughly .88 trillion). On May 7, 2024, ESMA released a Call for Evidence seeking input from various stakeholders to assess the viability and implications of allowing UCITS to include a broader array of asset classes, notably cryptocurrencies.
The UCITS framework, central to EU retail investment, accounts for around 75% of all retail investment in collective funds within the region. With its global reputation for strict regulation and investor protection, the inclusion of cryptocurrencies could represent a transformative shift in the investment landscape.
The Next Big Catalyst For Crypto?
ESMA’s review aims to address the evolving financial landscape, where the number and variety of financial instruments have expanded significantly since the UCITS framework was established nearly two decades ago. This expansion has led to uncertainties in determining asset eligibility, causing divergent interpretations and applications of the directive across member states.
Sean Tuffy, a financial regulation expert, underscored the significance of this development to DL News, stating, “If ESMA is convinced, it would be the final step in mainstreaming crypto assets in Europe,” referring to it as a potential “game changer.” This sentiment is echoed by industry experts who believe that the inclusion of crypto assets could provide a robust alternative to traditional investment options, potentially enhancing portfolio diversification and returns.
The Call for Evidence targets a broad audience, including investors, consumer groups, UCITS management companies, self-managed UCITS investment companies, depositaries, and trade associations. These stakeholders are invited to share their insights on market practices, interpretative issues, and practical application concerns related to the eligibility criteria and other provisions of the UCITS EAD.
One of the critical areas of focus is the transversal consistency of key notions and definitions used in the UCITS EAD with other pieces of legislation in the EU Single Rulebook. This alignment is crucial to ensure that any new asset classes, such as cryptocurrencies, are integrated smoothly and consistently across all regulatory frameworks.
Andrea Pantaleo, a lawyer specializing in crypto regulation, highlighted several potential benefits and challenges. He told DL News, “UCITS funds have specific investment limitations depending on the type of assets. We won’t have a 100% crypto UCITS fund, but hopefully many investment funds could hold 1-2% of their liquidity in crypto.”
However, he also pointed out a significant obstacle: the coordination of custody regulations, which must align with the EU’s upcoming Markets in Crypto-Assets regulation (MiCA). MiCA is set to establish stringent rules for the segregation of assets and policies for their safekeeping, which will be pivotal in the custody of crypto assets.
The potential inclusion of cryptocurrencies in UCITS comes at a time when other major economies, such as the US and Hong Kong, have begun integrating crypto assets into their financial products, notably through the approval of Bitcoin ETFs. These developments have not only validated the financial viability of cryptocurrencies but have also spurred significant investment inflows into the sector.
The ESMA consultation process is set to conclude on August 7, 2024, after which the watchdog will compile the feedback and develop its technical advice to the European Commission. This advice will play a crucial role in determining whether cryptocurrencies will be included in the UCITS framework, potentially heralding a new era for crypto investment in Europe.
At press time, the total crypto market cap stood at .202 trillion.
NYSE Considers 24-Hour Trading Model in Response to Crypto Market Trends
Cryptocurrency markets operate continuously, trading every day of the week, around the clock. In a similar vein, reports indicate that the New York Stock Exchange (NYSE) is exploring the possibility of shifting to 24/7 operations. The data team at NYSE has conducted a survey among its investors, revealing a strong interest in the availability of […]
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Kenya Resists US Government’s Lobbying for Worldcoin, Considers Limiting Use of Tiktok
The U.S. government has attempted to persuade Kenyan officials to lift the suspension of Worldcoin’s operations in the country, but these overtures have been rejected, the Kenyan Interior cabinet secretary has said. The Kenyan government is also considering restricting officials’ use of the social media platform Tiktok. No Review of the Suspension Decision The Kenyan […]
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Real-World Assets Platform Gluwa Considers Developing Liberia’s CBDC
The real-world assets platform, Gluwa, is exploring the potential to assist in the development and launch of Liberia’s central bank digital currency. To increase the likelihood of the digital currency’s success, Gluwa is also considering the launch of a satellite-based internet service. Making the Digital Currency Compatible with Liberia’s Mobile Money System Gluwa, a real-world […]
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Pro-Crypto US Attorney Considers Challenging Elizabeth Warren in Massachusetts Senate Race
John Deaton, a U.S. lawyer known for his pro-crypto stance, is reportedly considering a run against Massachusetts Senator Elizabeth Warren. The Republicans are eager to nominate a formidable candidate against Warren. This strategy could compel her to concentrate on her political survival, potentially diverting her focus from supporting other Democrats. Pro-Crypto U.S. Lawyer to Decide […]
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Hong Kong Considers Allowing Trading of Spot Crypto ETFs
Hong Kong is examining allowing the launch of spot cryptocurrency exchange-traded funds (ETFs), given that the risks of these instruments are addressed. In a recent interview, Julia Leung, CEO of the Hong Kong Securities and Exchange Commission, stated that the focus of the organization’s approach was “consistent” regardless of the asset.
Hong Kong Open to Allowing Trade of Spot Crypto ETFs
Hong Kong may be open to allowing the launch of trading spot cryptocurrency-based exchange-traded funds (ETFs). According to Julia Leung, CEO of the Hong Kong Securities and Exchange Commission, the city is considering permitting the issuance of such products, given that the risks are adequately managed.
In a recent interview, Leung stated:
We welcome proposals using innovative technology that boosts efficiency and customer experience. We’re happy to give it a try as long as new risks are addressed. Our approach is consistent regardless of the asset.
While the city already allows the trading of futures-based cryptocurrency ETFs, the reach has been limited, with only three offerings managing around million, a number that is dwarfed by the overall size of the local ETF market.
In addition, Hong Kong is also taking steps to allow the issuance of tokenized real-world assets for retail investors, opening the path for a larger market to access these instruments.
On this, Leung explained:
As the crypto ecosystem evolves step-by-step to the point where we’re comfortable, then we’re happy to open up more access to the wider investing public.
Hong Kong vs U.S.
The open stance of Hong Kong contrasts with the posture of regulators in the U.S., which have repeatedly denied approval for the launch of a spot bitcoin ETF. Nonetheless, a legal victory obtained in October by Grayscale, in which the U.S. Court of Appeals for the D.C. Circuit ordered the U.S. Securities and Exchange Commission (SEC) to reconsider Grayscale’s ETF conversion application, has experts optimistic about an upcoming approval of a spot bitcoin ETF.
United States Securities and Exchange Commission Chair Gary Gensler recently acknowledged that his organization is currently sitting on top of 8-10 ETF applications. Gensler stressed the commission would review each one without prejudgement.
Lawmakers have also pushed against the SEC’s actions. In September, U.S. Representatives Mike Flood, Tom Emmer, Wiley Nickel, and Ritchie Torres directed a letter to the SEC, asking for the swift approval of a bitcoin ETF and stating that the institution’s position was “untenable” moving forward.
What do you think about Hong Kong and its posture on spot Bitcoin ETFs? Tell us in the comments section below.