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| The first Bitcoin futures ETF was launched at the New York Stock Exchange in October 2021 |
As the government of India takes it time to decide its stance on cryptocurrencies, new possibilities for crypto sector growth are gushing into the country with the beginning of 2022. A memorandum of understanding (MoU) has reportedly been signed between Torus Kling Blockchain IFSC and India INX to launch 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 stock exchange platform.
The MoU has assigned the responsibilities of launching India's ETF in three parts — India INX will be the trading platform, Cosmea Financial Holdings will do the distribution, and Kling Trading will serve as the technology partner, reports have claimed.
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 after getting approvals from the International Financial Services Centres Authority (IFSCA) and other relevant regulatory bodies.
“We will be launching products in these new age assets in complete compliance with the prevailing laws after receiving all required regulatory approvals,” IndiaInfoLine quoted V. Balasubramaniam, Managing Director and CEO of India INX as saying.
What Are Exchange Traded Funds?
ETFs are financial products that are regulated and can represent a wide array of different assets. An ETF keeps track of the price fluctuations of an underlying asset like Bitcoin or Ethereum, giving people an alternative to extract profits from the price trend without really owning even one unit of the asset.
ETFs are a type of price-tracking trading contract entered into by two parties.
Both the parties agree to purchase or sell assets at a predefined price at a later date.
The final day price of the underlying asset of the ETF – more or less – cannot influence this contract and one party ends up making a profit, a report by CoinDesk explained.
Other than removing the cost and requirement of storing an asset, Future ETFs makes the commodity easier to buy and trade.
In addition, the margin of profits that one of the parties getting into a contract can extract can be of high magnitudes.
On October 19, 2021, the first Bitcoin futures ETF was launched at the New York Stock Exchange, spelling out a moment of validation for the budding crypto space.
At the time, the valuation of Bitcoin had risen to $64,476 (roughly Rs. 48,51,174), close to its last attained all-time high of $68,000 (roughly Rs. 50.3 lakh) per token surrounded by excitement among crypto enthusiasts.
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