AIFMD - ESMA updates its Q&As in respect of crypto-assets

On 17 December 2021, ESMA updated its Q&As on the Application of the AIFMD by including a question asking whether managers of undertakings investing in crypto-assets are subject to the AIFMD.

The Commission’s answer emphasises the importance of assessing on a case-by-case basis whether the undertaking is an ‘AIF’ as defined in Article 4(1)(a) of the AIFMD and calls on market participants and NCAs to pay close attention to ESMA's Guidelines on key concepts of the AIFMD.

The Commission’s answer points out that:

• a collective investment undertaking which raises capital from a number of investors to invest in crypto-assets in accordance with a defined investment policy for the benefit of those investors will be seen as an AIF under Article 4(1)(a); and
• as AIFMD does not provide a list of eligible or non-eligible assets, AIFs may, in principle, invest in any assets provided the AIFM can ensure compliance with the AIFMD.

However, the Commission also notes that national requirements may impose more specific investment and risk diversification requirements for AIFs investing in crypto-assets and/or limitations regarding the target investors of such AIFs.

The risks involved in investments in crypto-assets have been previously emphasised in the joint ESMA, EBA and EIOPA warning of February 2018 that market participants and investors must stay alert to "the high risks of buying and/or holding these assets, including the possibility of losing all their money."