The European Securities and Markets Authority (ESMA) is reviewing regulations to potentially allow cryptocurrency integration into a vast investment market valued at approximately €12 trillion. This development could revolutionize the investment landscape, mainstreaming crypto assets in Europe.

ESMA's review aims to address the evolving financial landscape, where the variety of financial instruments has 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 across member states. If ESMA is convinced, this could be a significant step in mainstreaming crypto assets in Europe.

The review targets a broad audience, including investors, consumer groups, and trade associations, inviting them to share insights on market practices, interpretative issues, and practical application concerns related to the eligibility criteria and other provisions of the UCITS EAD. Key areas of focus include transversal consistency with other EU legislation and the coordination of custody regulations, which must align with the EU's upcoming Markets in Crypto-Assets regulation (MiCA).

The potential inclusion of cryptocurrencies in UCITS comes as other major economies, like the US and Hong Kong, integrate crypto assets into their financial products. The ESMA consultation process concludes on August 7, 2024, after which the watchdog will compile feedback and develop technical advice for the European Commission. This advice will determine whether cryptocurrencies will be included in the UCITS framework, potentially heralding a new era for crypto investment in Europe.