Updated 20 Aug, 2021

First EU-Regulated Bitcoin Fund Ready to Launch


Key Takeaways:

  • A French asset manager is set to launch the first EU-compliant Bitcoin ETF
  • The Bitcoin fund highlights growing institutional demand for exposure to crypto

A French Asset Management Firm to Launch EU’s First Regulated Bitcoin Tracker

Melanion Capital, a Paris-based asset manager, has been given the go-ahead to launch the first EU-compliant Bitcoin exchange-traded fund (ETF). The fund will be closely tracking the price of Bitcoin through a basket of up to 30 stocks related to cryptocurrency and blockchain technology.

According to Melanion Capital, the stocks comprising the exchange-traded fund are 90% correlated to the price of bitcoin, which is famous for its volatility and sharp swings.

The approval by EU regulators marks one of the first steps of mainstream cryptocurrency adoption in Europe. The fund will be able to provide access to investors seeking exposure to crypto assets backed by EU standards. In this case, a regulatory framework known as UCITS will be making sure investors are protected.

The French asset management firm is focused on derivatives trading and uses computer-driven strategies that would be put to use into the digital asset space. The Bitcoin ETF, called the Melanion BTC Equities Universe Ucits ETF, is preparing for listing on Euronext in Paris.

The Launch Highlights Demand by Institutions to Tap into Crypto Space

The structure and the presentation of the Bitcoin fund highlights how institutional investors find ways to tap into the booming cryptocurrency market in the face of regulatory scrutiny and even outright bans over crypto in some parts of the world.

Currently, European regulators similar to their US counterparts do not allow digital assets to be held directly in funds. Unless they are owned as derivatives, for example linked to listed securities.

Some of the holdings in Melanion’s Bitcoin tracker include crypto miners Argo Blockchain and Riot Blockchain. Also present in the list is Galaxy Digital, an investment management firm led by entrepreneur and Bitcoin advocate Mike Novogratz. Melanion Capital has selected mostly firms with high sensitivity to movements in bitcoin’s price.

The launch shows institutional money managers are becoming increasingly interested to dive into cryptocurrency and blockchain technology.

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