Cryptocurrency and its allied industries have seen a roller-coaster ride last year and many hope they will continue to show strong, albeit volatile, growth this year as well. New investors appear to be the strongest backers of the digital assets industry and companies offering these services are making an all-out effort to woo this investor segment. Many of them are coming up with lucrative ways to tap the investors in the country. Moving in that direction, Asia's first exchange-traded fund (ETF) is likely to be launched in India soon.
Torus Kling Blockchain IFSC, a joint venture between Mumbai-based Cosmea Financial Holdings and Hyderabad-based Kling Trading India, has inked a Memorandum of Understanding with the BSE's international arm India INX to develop digital asset-based products in India. By the end of this fiscal, this service should be available in GIFT City, a central business centre in Gandhinagar, Gujarat.
Key things to know
– An exchange-traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other assets. But it can be traded on a stock exchange the same way a regular stock can.
– Torus Kling Blockchain IFSC is a 50:50 joint venture between Cosmea Financial Holdings, which is sponsored by Sam Ghosh, and Kling Trading India.
– ETFs like the one proposed by Torus Kling Blockchain and Kling Trading track returns from cryptocurrencies without directly being invested in the virtual coins.
– This ETF is expected to be launched in a sandbox environment, which will help in live testing the products for emerging risks and correct them before they can affect a large number of investors.
– Once the ETF secures regulatory approvals, including from GIFT regulatory authority International Financial Services Centre (IFSCA), Indian investors will be able to invest in it using the RBI's liberalised remittances scheme (LRS) route.
– The exchange has already made a request for approval to IFSCA.
– ETFs are said to allow trading through regular investment accounts, bypassing the risks associated with cryptocurrency exchanges.
– Torus Kling Blockchain is aiming for $1 billion in assets in the first two years of launching the services.