Irish Central Bank Might Deter Investment Funds from Holding Cryptos
The Central Bank of Ireland is highly unlikely to allow investment funds to hold cryptocurrencies directly. The bank communicated this earlier today, claiming that these assets come with very high risks that may be difficult to manage.
Irish Central Bank to Deter Investment Funds from Investing in Digital Assets
Earlier today, the Central Bank of Ireland said that it might not allow investment funds to hold cryptocurrencies directly. It cited that these assets are very risky and could even be dangerous for investors with vast knowledge since they vary uncontrollably.
The Central Bank directed the message to ‘Undertakings for Collective Investment in Transferable Securities,’ or UCITS. UCITS are organizations that invest in securities and function under the management of the European Union. The directive also applies to alternative investment funds (AIFs) that do not fall under the regulation of the UCITS directive.
According to the European Commission, the directive may also touch other organizations like hedge funds, private equities, and real estate. Per the central bank of Ireland, cryptocurrencies are highly risky and speculative, but they can now work well with wholesale and professional traders.
The bank made the statement in its second annual Securities Markets Risk Outlook Report. It was also stated when the bank made reports on UCITS and AIFs in December 2021.
Crypto Adoption and Regulation in Europe
In Europe, most countries work under joint leadership. They follow the rules set in joint efforts by governing bodies like the European Union. The European Union is wary about cryptocurrencies but does not plan to enact a blanket ban on them. Therefore it is using ways to reduce the risk level of trading these assets.
One of the key signs that it does not have issues with the coins is allowing France to trade crypto ETFs. Melanion Capital, a France asset management firm, recently received a go-ahead from the French regulators to launch a BTC ETF. The ETF tracks the spot value of BTC. It is also allowed to track a maximum of 30 stocks with a 90% correlation to BTC’s price.
The ETF was found to hit the EU’s UCITS standards and be available to all traders in the trading bloc. The Melanion BTC Equities Universe Ucits ETF will be the EU’s first official BTC ETF. The ETF would also be listed on Euronext in Paris at a trading fee of 0.75%. Even though there have been other ETFs before Melanion’s, European regulators have rejected their use by institutional investors.
Like other main economies globally, then European Nations are working to reduce the risks associated with cryptos to safeguard their investors. This tactic is identical to what the US has been doing over the past few months. Last year it allowed the trading of BTC ETFs but did not legalize the original cryptocurrencies. These developments show that the crypto space may not need to be wary of a blanket ban since most regulators only want to make them safer for adoption.
