Key takeaways:
- The FT said that JUN was forced to abandon an investment in a crypto ETP because of a compliance problem.
- The report states that the investment was canceled at a loss of $834 after being reported by the corporation through its “regular oversight process.”
The FT reported on Friday that Jupiter Asset Management (JUN), a London-listed company with over $65.8 billion in assets under management, was forced to abandon an investment in a cryptocurrency exchange-traded product (ETP) because of a compliance problem.
During the first half of 2023, Jupiter’s Gold & Silver fund invested $2.58 million in 21Shares’ Ripple XRP ETP. The report states that the investment was canceled at a loss of $834 after being reported by the corporation through its “regular oversight process.”
Europe’s inconsistent cryptocurrency laws are the cause of the cancellation. UCITS funds cannot invest in cryptocurrency, and Jupiter’s Gold & Silver fund is based in Ireland. Certain European countries, such as Germany, permit investment funds to own cryptocurrency.
The European Commission has established guidelines for investment funds known as UCITS, or undertakings for collective investment in transferable securities.
Even though the launch of spot cryptocurrency products in the US has fueled the most recent bull run in the crypto markets, Jupiter’s crypto investing issue emphasizes the need for a consistent framework for crypto investments.
Up to 10% of the assets in UCITS funds’ portfolio may be non-liquid. Meanwhile, different European regulations govern whether or not those funds can be invested in cryptocurrency-containing products.
According to the Financial Times, before the Irish government declared cryptocurrency investments prohibited, Jupiter’s Gold & Silver fund held cryptocurrency.
According to regulators in Ireland, France, and the UK, UCITS funds are not permitted to invest in cryptocurrency assets. Meanwhile, Germany permits UCITS funds to invest in cryptocurrency ETPs as long as the product accurately reflects the value of the underlying cryptocurrency asset.
For the time being, cross-border fund trading must adjust nation-specific regulations to meet regional standards. Nonetheless, the regulatory conflict around digital assets demonstrates why the bitcoin sector would benefit from a unified approach.
