India seems to be changing its harsh stance on digital assets. The country could soon launch its first Bitcoin and Ethereum futures exchange-traded fund(ETF), which is a positive sign, given that a crypto ban bill loomed in late 2021.
This product will be similar to the crypto ETFs in the US because it will be based on futures contracts.
India launching BTC & ETH futures ETFs
A report by the Economic Times stated that the ETF would be offered through a partnership between Torus Kling Blockchain and India INX. The ETFs will also be launched alongside US-listed large-capitalization discount certificates.
This will be the first time a country outside of the US is issuing an ETF backed by a futures contract. However, these ETFs will be closely monitored as they will be launched under the International Financial Services Centers Authority (IFSCA) sandbox.
Under this partnership, Torus Kling Blockchain will provide the liquidity needed by India INX. This liquidity will be provided through smart order routing. The ETF products will also be distributed through Torus’s team and other partners.
The two companies are optimistic about adopting these products, with Torus predicting that during the first two years of launch, the crypto ETFs will have $1 billion in assets under management.
Mr V. Balasubramaniam, the CEO of India INX, commented on this initiative, saying, “This is a part of our innovation initiative to benchmark offerings with other international financial centres. We will be launching products in these new-age assets in compliance with the prevailing laws after receiving all required post regulatory approvals.”
The derivatives market has recorded notable growth as compared to the spot market. The report from Economic Times noted that the global derivatives trading volumes were at $3.2 trillion, while the spot trading volumes came in at $2.7 trillion.
Crypto regulatory landscape in India
India has been sending mixed signals regarding crypto regulations. Towards the end of last year, reports stated that the country’s legislatures were planning to vote on a bill that banned the use of private cryptocurrencies. However, the news of an ETF launch shows that a ban could not be happening.
Nevertheless, India follows in the cautious footsteps being taken by the US Securities and Exchange Commission (SEC). In October 2021, the SEC stated that it approved Bitcoin futures ETFs because they offer better investor protection. The regulatory body has turned down several applications for spot ETFs.
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