Mudrex, a California-based crypto investment platform backed by Y-Combinator, has unveiled its plans to offer U.S. spot bitcoin exchange-traded funds (ETFs) to both retail and institutional investors in India.
CEO and co-founder Edul Patel emphasized the significance of this move, particularly for institutional clients, stating, “this is much more valuable to institutions, as this was already available to retailers.”
In its initial phase, the platform will introduce four spot ETFs, featuring offerings from prominent firms such as BlackRock, Fidelity, Franklin Templeton, and Vanguard. With a subsidiary registered with the Intelligence Unit of India, Mudrex has expanded its presence into the European Union, holding licenses in Lithuania and Italy. Transactions will be facilitated through U.S. broker partners, while the Indian subsidiary will oversee the spot bitcoin ETF service.
While retail clients have had access to spot bitcoin ETFs through U.S. stock investing companies, Mudrex claims to be the first in India to extend such services to institutions, marking a significant milestone for the firm.
Patel outlined the legal framework allowing Indians to invest in these ETFs under the Liberalised Remittance Scheme (LRS), enabling diversification of portfolios through Bitcoin. Under the LRS, annual overseas investments up to $250,000 are permitted, with Mudrex setting investment thresholds between $5,000 and $250,000.
Highlighting the importance of robust banking relationships in the U.S. for seamless transactions under the LRS, Patel revealed that around 20 out of 350 collaborating institutions have initiated the process of joining, expecting investment volumes with an average ticket size of $110,000.
This development unfolds amidst a regulatory landscape in India where the central bank and government exhibit differing stances on cryptocurrency. While the Reserve Bank of India (RBI) expresses reservations towards crypto, citing risks to the national economy, the Finance Ministry is working to integrate crypto service providers within the regulatory framework, prioritizing investor and economic protection.
In response to regulatory uncertainties, the Indian government has intensified efforts to combat illicit activities in the crypto space. The Enforcement Directorate filed a charge sheet against 299 entities, including individuals of Chinese origin involved in a cryptocurrency scam, under the Prevention of Money Laundering Act (PMLA).
In contrast, the RBI is advancing in digital innovation with the development of the central bank digital currency (CBDC), the digital rupee. Governor Shaktikanta Das’s announcement of plans to explore offline functionalities for the digital rupee signifies a significant stride towards enhancing financial inclusion and accessibility, particularly in areas with limited internet connectivity. This initiative aims to expand digital financial services nationwide.
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