By Mudrex, an Indian cryptocurrency investment platform, has announced plans to offer US spot Bitcoin (BTC) exchange-traded funds (ETFs) to institutional and retail investors in India, said CEO and co-founder Edul Patel in a recent interview.
Patel emphasized the significance of this move for institutions, granting them access to spot bitcoin ETFs, previously only accessible to retail investors via US stock investing firms.
Indian Investors Can Invest in US Spot Bitcoin ETFs
Investment platform Mudrex will be the first to offer this service to institutions in India. Within the first phase of its offering, Mudrex will list the top four BTC ETFs from BlackRock, Fidelity, Vanguard, and Franklin Templeton.
Committed to full compliance with Indian regulatory frameworks, Mudrex is registered with the Financial Intelligence Unit (FIU) of India, ensuring adherence to stringent legal standards. The platform empowers users with access to a diverse array of over 350 cryptocurrencies and crypto baskets, augmented by actionable insights to guide investment decisions effectively.
Edul Patel, CEO and co-founder of Mudrex, emphasized the platform’s pioneering status in offering this service to Indian investors. In an interview, Patel highlighted the significance of Mudrex’s robust banking relationships, enabling seamless transactions for users navigating the complexities of the LRS process.
“This is much more valuable to institutions, as this was already available to retailers,” Patel said, highlighting the strategic significance of the move. While retail clients in India had limited access to spot Bitcoin ETFs through US stock investing companies, Mudrex aims to pioneer this service for institutional investors in the country.
“We are certainly the first Indian crypto platform to offer this service. The LRS is the tricky part for most people, and over there (in the US), because we also have strong banking relationships, we’re able to help users do these transactions in a very seamless way, and that’s why these services are important.”
Mudrex, headquartered in California and backed by Y-Combinator, operates with a subsidiary registered with the Intelligence Unit of India. Additionally, it holds licenses in Lithuania and Italy within the European Union.
Mudrex Facilitates Indian Investors’ Access to Crypto ETFs Through the Liberalized Remittance Scheme
Indian investors seeking exposure to crypto ETFs can leverage two avenues: domestic exchanges or the Liberalized Remittance Scheme (LRS), with the latter incurring a 20% tax collected at source (TCS) on remittances. Mudrex intends to leverage the LRS route to facilitate seamless access to spot Bitcoin ETFs for its clientele.
Patel explained the operational structure, indicating that Mudrex would ensure the processing of actual transactions through broker partners in the US. At the same time, its Indian subsidiary would facilitate the spot Bitcoin ETF service. This development comes amidst a complex regulatory landscape in India, where the Reserve Bank of India (RBI) and the Finance Ministry hold divergent views on cryptocurrency.
While the RBI has expressed skepticism towards crypto, the Finance Ministry’s Intelligence Unit has registered numerous Indian crypto service providers and imposed stringent taxes on the sector. While the two agree on the need to protect the Indian economy and investors, their regulatory focus can appear to differ.
Patel elucidated the regulatory framework surrounding the venture, highlighting the compatibility of bitcoin spot ETFs with the Liberalized Remittance Scheme (LRS), which simplifies overseas investments for Indians. Mudrex will enable investments in spot bitcoin ETFs on its platform, with a minimum investment threshold of $5,000 and a maximum limit of $250,000, aligning with the RBI’s prescribed annual LRS limit.
In contrast, utilizing domestic crypto exchanges in India subjects investors to a 1% tax deducted at source (TDS) on the transfer of crypto assets, coupled with a hefty 30% tax on profits. Navigating the intricacies of the LRS, Patel emphasized Mudrex’s commitment to facilitating seamless transactions and leveraging robust banking relationships to streamline users’ processes.
“The LRS is the tricky part for most people, and over there (in the US), because we also have strong banking relationships, we’re able to help users do these transactions in a very seamless way, and that’s why these services are important,” Patel stated.
Among Mudrex’s clientele of 350 institutions, Patel revealed that approximately 20 have initiated the process of joining the platform for spot BTC ETF investments, with an anticipated average ticket size of $110,000.
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