Despite cautionary statements from India’s central bank likening crypto investments to speculative bubbles like the tulip mania, affluent Indians are leveraging their annual remittance quotas to participate in the booming Bitcoin ETF market.
Through the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), which allows individuals to remit up to $250,000 per financial year, wealthy Indians are diving into the world of spot-Bitcoin ETFs. These ETFs, launched in January, have garnered significant attention despite regulatory warnings.
Data from Vested Finance, a local platform facilitating investments in overseas securities, sheds light on the growing demand for Bitcoin ETFs among Indian investors. The platform has recorded over $5.3 million in trading volumes related to these ETFs, with buy orders accounting for 67% of the total transactions. Notably, approximately 70% of the ETF traders fall into the category of affluent, high-net-worth individuals, according to Viram Shah, the CEO of Vested, as reported by Bloomberg.
The primary allure for these investors seems to be the tax advantages offered through the LRS. Shah explained, “For long-term holders, the taxation can be reduced to below 20% on capital gains unlike the flat 30% and 1% TDS applicable when investing directly through crypto platforms.”
This trend is not limited to individual investors; Indian family offices are also exploring the Bitcoin ETF space through the LRS route. Mudrex, a crypto asset management platform backed by Y Combinator, has partnered with Vested to provide spot ETFs to its clients. Mudrex CEO Edul Patel highlighted the appeal of this approach, stating, “Investment in Bitcoin ETFs via the LRS is a tax-compliant and better-understood approach which is making family offices take some exposure in this space.”
These developments unfold against a backdrop of caution from the Reserve Bank of India. Governor Shaktikanta Das reiterated the bank’s stance on cryptocurrencies, expressing concerns about their speculative nature. He warned against the “crypto mania” and its potential negative impact, drawing parallels to historical bubbles like the tulip mania.
Despite regulatory skepticism, the growing interest in Bitcoin ETFs among wealthy Indians showcases a persistent appetite for crypto exposure, driven by tax incentives and a desire for regulatory compliance.
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