Mumbai: Asia’s first cryptocurrency exchange-traded fund (ETF) could be launched in India’s GIFT City this year.
Torus Kling Blockchain IFSC, a joint venture between Mumbai-based Cosmea Financial Holdings and Hyderabad-based Kling Trading India, has signed an MoU (memorandum of understanding) with BSE’s international arm India INX to launch digital asset-based products, which will be traded on GIFT City’s IFSC (international financial services centre).
The development comes after the US securities regulator SEC in October 2021 allowed launch of a crypto futures ETF, the first such in the US. ETFs like these track returns from cryptocurrencies without investing directly in the digital tokens.
The Torus Kling crypto futures ETF will be launched in a sandbox environment, which is under GIFT regulatory authority IFSCA. Such a sandbox allows regulated entities to launch and live-test products under strict controls.
Once the Torus Kling ETF obtains regulatory nod, Indians will be able to invest in this ETF using the RBI’s liberalised remittance scheme (LRS) route. Global investors, who have similar options in the US and Switzerland, will have another alternative to invest through the regular process.
According to India INX’s MD & CEO V Balasubramaniam, the exchange has already made an application to IFSCA under the regulatory sandbox.
According to estimates, global annual derivatives trading volume in the cryptocurrency market is about $3.2 trillion, while total spot volume is at approximately $2.7 trillion. According to Torus Kling Blockchain IFSC’s CEO Krishna Mohan Meenavalli,ETFs allow trading through regular investment accounts, bypassing the hassle and security concerns of cryptocurrency exchanges.