Torus Kling looks to launch India’s first crypto futures ETF in Gift City


Torus Kling Blockchain IFSC, an equal joint venture between Sam Ghosh-promoted Cosmea Financial Holdings and Kling Trading India has signed a memorandum of understanding (MoU) with India INX to launch the country’s first bitcoin and ethereum futures exchange-traded funds (ETFs). These funds will be the first crypto-backed futures ETF outside of the US.

As per the MoU, India INX will be the trading platform and Cosmea Financial Holdings will be the distributor, while Kling Trading will be the technology partner.

Cosmea, which is promoted by ex-Reliance Capital’s CEO Sam Ghosh has applied to the Reserve Bank of India (RBI) for a small finance bank (SFB) license and is awaiting regulatory approvals.

India INX, BSE’s international arm, started trading activities on 16 January 2017 and is India’s first international exchange set up at the GIFT IFSC.

Torus Kling Blockchain IFSC will be the liquidity provider to India INX by providing round-the-clock liquidity with smart order routing.

The ETF futures are expected to be launched by the end of this fiscal under a sandbox construct of the International Financial Services Centres Authority (IFSCA). The launch of the products is subject to IFSCA and other regulatory approvals.

“New Asset class is tip of the iceberg. Exchange trade products allow trading through regular investment accounts, bypassing the hassle and security concerns of cryptocurrency Exchanges,” said Krishna Mohan Meenavalli, CEO, Torus Kling Blockchain IFSC.

Apart from the digital assets, the Gift City startup is also launching Metaverse US-listed large-cap discount certificates. As per the company, these will be the first Asian discount certificates tracking metaverse large-cap stocks in the US and Europe markets.

Torus Kling Blockchain is targeting $1 billion in asset under management (AUM) in the first two years from customers participating in blockchain-backed products through ETFs and discount certificates.

As per the company, these targets are based on getting regulatory approvals for launching these products.

“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. This is a part of our product innovation initiative to benchmark offerings with other international finance centers,” said V. Balasubramaniam, managing director and CEO, India INX.

While Sebi has blocked crypto-based funds to be Introduced in the Indian market, IFSCA regulates products in International Financial Services Centres (IFSCs) like Gift City.

As per reports, global derivatives trading volume for the cryptocurrency market totaled $3.2 trillion, while total spot volumes were at $2.7 trillion.

As of now, Indian residents having a net worth of at least $1 million during the preceding financial year are allowed to invest in offshore funds listed in IFSCs. However, as per the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), banks can freely allow remittances by resident individuals up to $250,000 per financial year to invest overseas.

However, Indian residents are not allowed to invest overseas in futures, derivatives and crypto products.

“Bringing futures and launching crypto ETFs will attract a lot of LRS market into the Gift City because ETFs allow people to interact with the digital media digital assets,” said Meenavalli.

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