As the Indian government takes its time in defining its stance on cryptocurrencies, new opportunities for crypto sector growth are pouring into the country in early 2022. A Memorandum of Understanding (MoU) has reportedly been signed between Torus Kling Blockchain IFSC and India INX launches the first Bitcoin and Ethereum futures exchange-traded fund (ETF) outside of the US. While Torus Kling Blockchain is a joint venture between Cosmea Financial Holdings and Kling Trading India, India INX is the country’s first international exchange platform.
The MoU has divided responsibilities for launching the Indian ETF into three parts – India INX will be the trading platform, Cosmea Financial Holdings will handle distribution and Kling Trading will act as technology partner, reports say.
In India, the ETF futures will allow more people to experiment with the crypto space without having to risk their capital or assets.
They are expected to be launched by the end of this fiscal year after receiving approvals from the International Financial Services Centers Authority (IFSCA) and other relevant regulators.
“We will launch products in these new age assets in full compliance with applicable laws after obtaining all necessary regulatory approvals,” quoted IndiaInfoLine V. Balasubramaniam, Managing Director and CEO of India INX.
What are exchange traded funds?
ETFs are regulated financial products that can represent a variety of different assets. An ETF tracks the price movements of an underlying asset, such as Bitcoin or Ethereum, and offers people an alternative to profit from price movements without actually owning a unit of the asset.
ETFs are a type of price-tracking trading contract entered into by two parties.
Both parties agree to buy or sell assets at a predetermined price at a later date.
The last day’s price of the ETF’s underlying asset can’t — more or less — affect this contract, and one party ends up making a profit, a CoinDesk report explained.
Aside from eliminating the costs and requirements of storing an asset, futures ETFs make the commodity easier to buy and trade.
In addition, the profit margin that either party can achieve can be very high.
On October 19, 2021, the first bitcoin futures ETF launched on the New York Stock Exchange, marking a moment of validation for the burgeoning crypto space.
At that point, Bitcoin’s valuation had risen to $64,476 (roughly Rs. 48,51,174), close to its most recent all-time high of $68,000 (roughly 50.3 lakh) per token, amid excitement among crypto enthusiasts.
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