XRP ETP Blocked in Jupiter’s UCITS Fund Due To Irish Regulations

• Jupiter scraps $2.5M XRP ETP investment due to regulatory hurdles.
• Ireland prohibits crypto investments in UCITS funds, while Germany permits it.
• The cancellation stemmed from discrepancies regarding crypto investments across EU jurisdictions.

London-based Jupiter Asset Management (JUN), known for its substantial assets under management totaling over $65.8 billion, recently faced a setback in its crypto investment endeavors. 

According to a report by the Financial Times, the firm had to abandon an investment in a crypto exchange-traded product (ETP) due to compliance concerns. Specifically, Jupiter’s compliance division prevented its investment team from including a crypto ETP in one of its Irish UCITS — tradable investment funds.

Per the FT report, the development emerges at a time when fund managers are progressively considering incorporating crypto assets into their portfolios amid inconsistency in regulatory standards across the EU.

The investment in question was made by Jupiter’s Gold Silver fund, which allocated $2.58 million into 21Shares’ XRP ETP during the first half of 2023. However, this investment was flagged during the company’s routine oversight process. It was subsequently canceled, resulting in a loss, though the firm has augmented for the difference.

The cancellation stemmed from regulatory discrepancies regarding crypto investments across European jurisdictions. Jupiter’s Gold Silver fund, domiciled in Ireland, operates under regulations prohibiting crypto investments within tradable funds. 

Conversely, other European countries like Germany permit investment funds to hold crypto assets, albeit with stringent conditions. This stance is exemplified by DWS’s Fintech fund, which maintains a position in an Ethereum exchange-traded note (ETN), as noted in the report.

During a discussion at the Future of Asset Management conference in November, Cian Murphy, head of the international finance division at the Central Bank of Ireland, expressed that “it is difficult to make the case” for introducing crypto assets into a UCITS fund.

Jessica Reyes, head of the asset management policy division at the Autorité des Marchés Financiers, echoed this sentiment. Reyes stated that securities regulators generally are “not comfortable” with UCITS funds gaining exposure to crypto assets.