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India is about to have its first Bitcoin ETF despite regulatory issues

India Is About To Have Its First Bitcoin ETF Despite Regulatory Issues

Despite uncertainties regarding cryptocurrency regulation, India is making headway in the sector and may win its first Bitcoin (BTC) and Ethereum (ETH) futures exchange-traded fund (ETF).

The proposal was presented through a Memorandum of Understanding by Torus Kling Blockchain IFSC – a joint venture between Cosmea Financial Holdings and Kling Trading India – in collaboration with India International Exchange (India INX)

The idea is to launch the ETFs before the end of the fiscal year. But for that, the Indian International Financial Services Center (IFSC) needs to give its blessing.

If approved, this will be the country's first cryptocurrency-backed futures ETF.

Bitcoin and Ethereum ETF

According to the proposal, India INX will be the trading platform. Meanwhile, Cosmea Financial Holdings will be the distributor and Kling Trading will be the technology partner.

The product will be distributed through Torus' global distribution team and partners. The company is targeting $1 billion in assets under management in the first two years.

“ETFs allow trading through regular investment accounts, bypassing the security issues and concerns of cryptocurrency exchanges,” said Krishna Mohan Meenavalli, CEO of Torus Kling Blockchain IFSC.

As highlighted by Meenavalli, the expectation is that the approval will come out by March this year. According to her, cryptocurrencies are a new asset class and will create an opportunity for national and international investors to invest in digital assets.

“We want to bridge the gap between the digital asset market and regulated markets.”

V. Balasubramaniam, Managing Director and CEO of India INX, highlighted that India INX is looking to explore the launch of digital asset-based products and has already made a request to IFSCA:

“This is part of our product innovation initiative to benchmark our offerings against other international financial centers. We will launch products on these new-age assets in full compliance with applicable laws after receiving all necessary regulatory approvals.”

Cryptocurrencies in India

As mentioned, it is not new for India to debate the use and regulation of cryptocurrencies.

Since at least 2020, the country has been considering the possibility of banning cryptocurrencies. But the decision has been reconsidered several times and never materialized.

In late November, the Indian government announced a bill to ban “all private cryptocurrencies” in the country.

The government said the proposed law will allow "certain exceptions" to promote the underlying technology of cryptocurrencies and their applications. The initial document, however, does not provide any additional clarity on these exceptions.

The project was called “Cryptocurrency and Regulation of the Official Digital Currency 2021”. It also provides for the creation of a “facilitating structure” for the creation of the official digital currency for the country.

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