The latest report shows that France-based fund manager Melanion Capital has received a regulatory go-ahead for an exchange-traded fund that seeks to track the price of Bitcoin (BTC) while satisfying the laws in Europe.
In the information provided to Financial Times, Melanion Capital noted that the fund is 90% correlated to Bitcoin. It will basically track an index that includes 30 equities from some of the leading crypto-mining and blockchain companies. this includes some of the very popular names like Voyager Digital, Riot blockchain, and Mike Novogratz’s Galaxy Digital.
The index, consisting of a basket of stocks, will weigh the equity holdings based on their correlation with Bitcoin’s price. The bitcoin ETF from Melanion Capital the UCITS standard, regulatory benchmark critical for institutional investors.
Cyril Sabbagh, head of ETF at Melanion Capital, noted that offering a bitcoin ETF is a better option than direct Bitcoin investments. This is because it takes care of the risk of loss and piracy of tokens that is critical to institutional players.
Europe has already facilitated a number of crypto exchange-traded products (ETPs). However, launching the ETF was a major challenge. Speaking to FT, Melanion CEO Jad Comair, said:
“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.”
It is however yet not clear how the UCITS stand will be applicable to the new generation crypto asset class. A number of global regulators have been working on forming rules for crypto derivative products.
On Tuesday, August 3, SEC chairman Gary Gensler suggested the possibility of having a Bitcoin ETF in the U.S. by following the mutual funds’ rules. He suggested that the U.S. can have Bitcoin ETF tracking bitcoin futures offered by the CME Group.
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