How to Invest in Crypto ETFs in India
If you’re a crypto investor in India, there are a few ways you can invest in crypto ETFs. First, you can buy tokens from any Indian exchange by depositing your INR. Another option is to use the Liberalised Remittance Scheme (LRS) route, which allows you to send up to $250,000 per year and buy assets through an Indian brokerage account that will credit your US brokerage account for exposure to the ETF. Certain apps facilitate this process.
The Approval and Growth of Crypto ETFs
The SEC approved the first Bitcoin spot ETF on January 10, 2024. Over 10 ETFs have been approved so far, and many more have filed for approval. This approval came after a court ruling in September 2023 that mandated the SEC to make a decision on Bitcoin ETFs by January 10th. The largest asset managers in the world, such as Fidelity and BlackRock, have already created ETFs. In just four days since the launch of Bitcoin ETFs, over $10 billion worth of trades have already occurred.
Tax Considerations for Indian Crypto Investors
For Indian crypto investors, there are tax implications to consider when investing in crypto ETFs. If you choose to use the LRS route and send money abroad, you may be subject to a 20% TCS on remittances above 7 lakhs. On the other hand, if you trade on Indian exchanges, there is no TCS angle but you will be subject to a 1% TDS when selling and a 30% tax on profits.
Benefits of Investing in Crypto ETFs
Crypto ETFs offer similar benefits to equity ETFs. They provide a way for investors to diversify their portfolios and access the cryptocurrency market. While crypto ETFs are currently only available in the US, investors can still take exposure to Bitcoin through Indian exchanges. It’s recommended to allocate a small portion of your portfolio to crypto, starting with sub-10% and gradually accumulating assets over time.
Potential for Ethereum ETFs
There is speculation that Ethereum ETFs may also become available in the future. Ethereum is the second largest cryptocurrency by market cap, and institutions are already filing for ETFs around Ethereum. The launch of Bitcoin ETFs has sparked renewed interest in the crypto market, and Ethereum could be the next focus for investors.
Predicting the Future of Bitcoin
While it’s difficult to predict the future price of Bitcoin, based on recent money flow into ETFs, some experts believe that Bitcoin could surpass $100,000 in the next 18 months. In just four days since the launch of ETFs, over $600 million worth of new money has been invested in Bitcoin.
Hot Take: The Rise of Crypto ETFs
The approval and launch of crypto ETFs have brought significant attention and excitement to the cryptocurrency market. With over $10 billion worth of trades happening in just four days, it’s clear that there is strong demand from both individuals and institutions for exposure to cryptocurrencies. While tax considerations and limited availability in India may pose challenges for Indian investors, exploring options like the LRS route can still provide opportunities to invest in crypto ETFs. As more ETFs are approved and launched, it will be interesting to see how they impact the overall crypto market and if other tokens like Ethereum will follow suit with their own ETF offerings.
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