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Indians will soon be able to invest in a Blockchain Index Fund after SEBI’s thumbs up

The fund is the latest investment option to emerge out of the rapidly growing crypto market in India.

A blockchain index fund by Invesco has been approved by the Securities and Exchange Board of India (SEBI), LiveMint has reported. This is the first time that Indian investors will have the opportunity to invest in international companies that are part of the blockchain ecosystem.

The Invesco CoinShares Global Blockchain ETF Fund of Fund (FoF) invests in companies “that participate or have the potential to participate in the blockchain or cryptocurrency ecosystem,” the fund’s investment thesis states. Significant holdings include US-based crypto-exchange CoinBase and the Taiwan Semiconductor Manufacturing Company.

With the prospect of a blanket ban on crypto assets becoming more unlikely, crypto and blockchain seem to be gaining mainstream acceptance in India. SEBI’s nod to the blockchain fund is indicative of a larger trend of crypto adoption by Indian investors and public authorities.

What to know about the Invesco Global Blockchain Fund

The Invesco CoinShares Global Blockchain ETF Fund of Fund (FoF) will invest primarily in another overseas run by Invesco, titled ‘Invesco CoinShares Global Blockchain UCITS ETF’.

Who is it ideal for? According to the Scheme Information Document published on the SEBI website, the scheme is very high risk and ideal for investors seeking long-term capital appreciation.

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What are the holdings? The top 10 holdings of the Invesco Global Blockchain UCITS ETF, on which the fund is based, are:

  • Coinbase Global Inc – 4.83%
  • GMO Internet Inc – 4.34%
  • Kakao Corp – 4.32%
  • Taiwan Semiconductor Manufacturing Company – 4.25%
  • SBI Holdings Inc/Japan – 4.21%
  • Monex Group Inc – 4.18%
  • Hive Blockchain Technologies Ltd. – 3.86%
  • Bitfarms Ltd/Canada – 3.85%
  • Bit Digital Inc – 3.74%
  • MicroStrategy Inc – 3.58%

What are the historical returns? Invesco CoinShares Global Blockchain UCITS ETF has delivered a return of 94% in the past year and 53% since its inception in March 2019.

Are there other mutual funds related to cryptocurrencies?

As the crypto market matures, multiple investment avenues are propping up that might allow investors to distribute their investments across assets. One such investment product launched recently is ‘Coin Sets’ by Mudrex, a US-based crypto asset management platform.

With this option, investors will be able to diversify their crypto assets portfolio by investing in baskets they believe will augment their wealth, Cointelegraph reported. For example, the coin set named ‘DeFi 10’ will include top 10 DeFi tokens whereas the ‘NFT’ coin set will be a basket of the top NFT projects, the report explained.

These baskets will be created and curated by experts from the Mudrex team, who will take care of fund allocation, weightage, order execution, and periodic rebalancing as well.

Also read: What Investors Need To Know About Coin Sets, A Mutual Fund Approach To Cryptocurrencies

How will India regulate cryptocurrencies?

A government source recently told the Economic Times that a blanket ban on cryptocurrencies in India is unlikely, adding that “a middle path that balances the concerns of all stakeholders is more likely.” Considering that Indians have made large investments in crypto assets, an outright ban is unfeasible, the source added.

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India’s much-anticipated crypto bill is currently tabled before the Union Cabinet awaiting approval. Here’s a timeline of everything that’s happened till now around crypto regulation in India:

  • 2018: The Reserve Bank of India banned regulated entities including banks from providing services to crypto exchanges. It said that cryptocurrencies raise concerns of “consumer protection, market integrity, and money laundering, among others”.
  • 2019: A report by the Finance Ministry (drafted in 2017) advocated for a ban on the use of cryptocurrency in India. The report was drafted by an inter-ministerial committee chaired by the secretary of the Department of Economic Affairs Subhash Chandra Garg.
  • 2020: The RBI ban was then overturned by the Supreme Court of India which said that the move was “disproportionate”. It led to a surge in sign-ups across various crypto exchanges as they were able to access banking services.
  • 2021: Finance Minister Nirmala Sitharaman announced that the crypto bill was tabled before the Cabinet awaiting approval, LiveMint reported in August.
  • 2021: The RBI governor announced that the central bank is also working towards a “phased implementation strategy” for the introduction of central bank-backed digital currency (CBDC), giving regulators necessary powers of oversight and monitoring which cryptocurrencies lack.

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Written By

Reporter at MediaNama. Email: nishant@medianama.com

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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