India may soon see its first Bitcoin and Ethereum futures ETF

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Torus Kling Blockchain IFSC, which is a 50:50 joint venture between Sam Ghosh-promoted Cosmea Financial Holdings (CFH) and Kling Trading India, has signed a memorandum of understanding (MoU) with Gift City-based India International Exchange (India INX) to launch India’s first Bitcoin and Ethereum Futures ETF and Metaverse US listed Large-cap Discount Certificates. 

A discount certificate is a debenture through which one can acquire an underlying security at a discount to the current market price though the upside is also limited to a pre-decided cap. 

Interestingly, if launched, the ETF would be the first crypto-backed futures ETF outside US and the discount certificates would be the first in Asia tracking Metaverse Large Cap stocks in US and Europe markets. 

The ETF Futures will be launched under a Sandbox construct of International Financial Services Centres Authority (IFSCA), said a statement, while adding that Torus Kling Blockchain will be the liquidity provider to India INX by providing liquidity with smart order routing.  

Further, the product will be distributed through Torus global distribution team and partners and the firm is targeting assets under management (AUM) totalling $1 billion in the first two years. 

“India INX at GIFT IFSC is looking at exploring launch of digital asset-based products and has already made an application to IFSCA under Regulatory Sandbox,” said V Balasubramaniam, Managing Director & CEO, India INX. 

“This is a part of our product innovation initiative to benchmark offerings with other international finance centres. We will be launching products in these new age assets in compliance with the prevailing laws after receiving all required post regulatory approvals,” he added. 

In a similar context, Krishna Mohan Meenavalli, CEO, Torus Kling Blockchain IFSC said that exchange-traded products will allow trading through regular investment accounts while safeguarding investors and investments from the security concerns of crypto currency exchanges. 

Torus Kling Blockchain IFSC plans to launch the ETF in Gift City by the end of this fiscal, subject to IFSCA and other regulatory approvals.  

This assumes significance as reports suggest that global derivatives trading volume in the cryptocurrency segment totalled $3.2 trillion, while total spot volumes were half a billion lower at $2.7 trillion. 

Meanwhile, the ETF AUM has almost doubled from Rs 1.5 lakh crore to Rs 2.9 lakh crore during FY21 in India.

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