Melanion Capital to Launch First EU-regulated Bitcoin-tracking ETF

The Paris-based derivatives and computer-driven fund manager Melanion Capital got the approval from the French regulators to lunch an exchange-traded fund (ETF) for tracking up to 90% correlation with Bitcoin’s price and its performance, online media ETF strategy report Wednesday.

The emerging ETF will track the Melanion Bitcoin Exposure Index, managed by BITA and is required to fulfil the regulations under the Undertakings for Collective Investment in Transformable Securities (UCITS)- the EU standards.

Up to 30 stocks in sectors will be tracked in this fund, including the current biggest proportion Argo Blockchain, and other cryptos mining and blockchain tech firms, such as Riot Blockchain, Voyager Digital and Galaxy Digital. Melanion Capital said up to 90% correlated to the price of Bitcoin.

Per the ETF Strategy, those firms which intend to be qualified as part of the index must either derive at least half of their revenues from crypto asset management and trading, crypto banking and associated services, crypto mining, and provision of crypto mining hardware, or blockchain technology, or must hold cryptocurrency assets on its balance sheet, either as cash and receivables or as investment assets, of at least $10 million. Companies must also have a market capitalisation in excess of $100m and an average daily traded value of at least $500,000.

Jad Comair, President of Melanion Capital, said:

“It is, therefore, a major step for asset managers, allocators and in general for all investors interested in bitcoin, allowing them to have an effective tool to diversify their portfolio in a UCITS compliant format,”

Yet, the Financial Times indicated that the regulations of the UCITS fund were established over 30 years ago and “do not directly address crypto like Bitcoin,” as most regulators worldwide interpret the rules to digital assets that cannot be directly held in funds unless they are linked to listed securities.

“Most pipes of the traditional financial system stop at access to bitcoin; the ETF was a real challenge because of the sensibilities and politics currently surrounding bitcoin and bitcoin investing,” Jad Comair explained.

Bitcoin ETF is a type of security that tracks the overall price of Bitcoin. It enables investors to trade and purchase shares of it on traditional exchanges, circumventing crypto trading platforms.

Last month, Grayscale revamped its ETF ambitions through a new deal with Bank of New York Mellon Corporation as its ETF services provider. BNY Mellon bank would start handling accounting and administrative services Grayscale Bitcoin Trust starting from October. 

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