French fund manager Melanion Capital is poised to launch a new bitcoin-tracker ETF complete with Europe’s gold-standard regulatory approval, according to a new Financial Times report.
Melanion’s fund will track an index that includes 30 equities from leading blockchain and crypto-mining companies such as Riot Blockchain, Voyager Digital, and Mike Novogratz’s Galaxy Digital. The index weights its equity holdings based on their correlation with the price of bitcoin.
Melanion says the fund is up to 90% correlated with bitcoin, according to the FT.
Unlike the US, Europe already has a bevy of exchange-traded crypto products, but the new fund is the first to receive regulators’ highest level of approval, called UCITS. Funds regulated under UCITS are widely seen as offering superior safety and cover 75% of all investment by small investors, according to the European Commission.
“Most pipes of the traditional financial system stop at access to bitcoin,” Melanion CEO Jad Comair, told the FT. “The ETF was a real challenge because of the sensibilities and politics currently surrounding bitcoin and bitcoin investing.”
Exactly how to treat crypto remains ambiguous within the existing UCITS rules, which were developed decades ago. Many European regulators have read UCITS as barring funds from directly holding cryptocurrencies, according to the FT. Melanion follows other fund managers, like VanEck and Bitwise, who have created funds that invest in blockchain-exposed stocks.
France’s financial regulator is set to approve the Melanion fund, which will then permit the company to quickly obtain approval in 30 European nations under the EU’s “passporting” regime.