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March 21, 2022

Asia’s First Ever ETF Debuting in India

Since November 2021, India investors have been able to take positions in the cryptocurrency market without having to ‘put skin in the game,’ which means that they can actively participate in the market without holding tokens.

On Wall Street, the term “skin in the game” refers to tangible risk exposure; the direct acquisition of a financial asset that you intend to hold without the use of middlemen.

Despite the fact that the majority of cryptocurrency trading activity is generated by active speculators who are constantly looking for opportunities to profit from market fluctuations, the majority of them have skin in the game because they use fiat currencies to acquire digital tokens, which are then exchanged back to fiat when it is time to take profits.

Bitcoin investors who hold onto their tokens for an extended period of time have skin in the game, but they are also vulnerable to market volatility and at the mercy of currency conversion rates.

Indian investors are no longer required to put money at risk in order to profit from cryptocurrency markets. Investors in the Invesco CoinShares Global Blockchain exchange-traded fund (ETF) can now dip their toes in the crypto waters without worrying about whether their tokens will hold up through downturn markets or periods of excessive volatility, thanks to a Securities and Exchange Board approval.

Investing in this ETF, which is openly traded on the National Stock Exchange, does not imply owning any digital currencies; instead, the fund’s managers invest in companies committed to cryptocurrency and blockchain research.

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If you are already familiar with the operation of ETFs, the only thing left for you to do before purchasing shares of the Global Blockchain ETF is to review its prospectus and decide whether this is a trading instrument you would like to have in your portfolio.

If you are unfamiliar with ETFs, the first thing you should know is that they are similar to mutual funds in appearance but not in construction.

Mutual funds invest a predetermined amount in a basket of stocks whose value fluctuates in the market, whereas ETFs take positions in securities listed on certain stock exchanges using a composite tracking method.

ETF shares behave similarly to equity instruments in that they can be bought and sold just like business stock.

The Global Blockchain ETF, for example, is designed to track the shares of significant blockchain economy companies such as MicroStrategy and Coinbase. You could easily replicate Invesco’s portfolio by studying its prospectus, but the management of funds and assets would be totally up to you.

Although this ETF does not technically provide much direct access to cryptocurrencies, SEB regulators in India are already evaluating applications for new ETFs based on Bitcoin and Ether futures that would be listed on the India INX trading platform, bringing investors a little closer to actual tokens without actually holding or managing them as currency pairs.