Investment Blocked Due to Divergent Regulatory Approaches
Jupiter Asset Management’s compliance team recently blocked its investors from having exposure to a cryptocurrency exchange-traded product (ETP) in one of its Irish UCITs funds, as reported by the Financial Times. The reason for this block was the “divergent regulatory approaches in the EU.” UCITS are open-ended investment funds that are popular, especially for European retail investors. However, Ireland currently does not allow crypto investments in UCITS funds.
The report also mentions that European fund managers have been looking to hold exposure to crypto assets in their funds but have been unable to do so due to the “divergent regulations” in Europe.
- European fund managers are facing challenges due to divergent regulations.
- Ireland does not allow crypto investments in UCITS funds.
- European retail investors prefer UCITS funds for investments.
Impact on Jupiter Asset Management
Jupiter is a UK-based fund management group with assets under management of $66.5 billion. The compliance team’s decision had no regulatory intervention or impact on the fund, according to a Jupiter spokesperson. The trade was made, picked up by their regular oversight process, and then cancelled without any further regulatory implications.
UK Investors and Crypto Investments
In 2021, the U.K.-based Ruffer Investment Management revealed it had made a $1.1 billion profit in five months from investing in Bitcoin. Its Guernsey-based closed-ended fund, Ruffer Investment Company, had some exposure to Bitcoin in 2020. However, they later sold their Bitcoin holdings due to changing market conditions post-lockdowns.
- Ruffer Investment Management made a significant profit from Bitcoin investments.
- The firm sold its Bitcoin holdings due to changing market conditions.
European Crypto ETP Providers and Regulatory Bans
There are various products available in the European market, including crypto ETPs offered by providers such as 21Shares, CoinShares, WisdomTree, VanEck, Valour, Invesco, Hashdex, and ETC Group. However, in January 2021, the FCA implemented a ban on the sale of derivatives and ETPs due to potential harm they pose to retail consumers. Institutional investors can still access crypto products through reputable institutions like Goldman Sachs, ICAP, JPMorgan, and UBS.
Conclusion
The block by Jupiter Asset Management’s compliance team sheds light on the challenges faced by European fund managers regarding crypto investments within UCITS funds. Despite growing interest in crypto assets, regulatory hurdles continue to impede their integration into traditional investment vehicles.
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