Crypto ETFs

Crypto ETFs

Crypto ETFs

An ETF, or exchange-traded fund, is an investment security that conglomerates some of the attributes of stocks as well as Mutual Funds. Similar to that of stocks, ETFs trade intra-day on an exchange.  Also like with mutual funds, many ETFs seek to track the performance of a benchmark index, such as the S&P 500.

These days we have come across many ETFs which have opened up window for investors who are interested in avoiding exposure to virtual assets due to their complicated nature.

It was US SEC which allowed the first crypto-based ETF to get listed in October 2021.  Subsequently many ETFs linked to crypto have been listed globally wherein some invest in virtual assets directly, some hold on to futures, and some others concentrate on stocks of companies which are in blockchain and other crypto-related areas.

As we know an ETF is a basket of securities which trade like stocks.  For example, a NIFTY ETF tracks the prices of the 50 index stocks and a crypto ETF tracks the value of one or more crypto assets like Bitcoin, the main benefit being that it paves way for diversification of portfolio without owning the asset.

In India, ETFs are typically offeed by MF companies, and markets regulator SEBI has restricted them to stocks and their indices, gold and silver.  Experts say that asset management companies would not come up with crypto ETF plans till the time there is a law in lace.  Indians can invest in global crypto ETFs throgh areas which permit them to buy foreign listed stocks, bonds, MFs and ETFs using RBI’s liberlized remittance scheme (LRS) upto USD 250,000 (about INR 1.9 crore) per year

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