Torus Kling Blockchain IFSC, a 50:50 joint venture between Cosmea Financial Holdings (CFH) and Kling Trading India, has inked an agreement with India INX to launch the first ethereum and bitcoin futures exchange-traded fund (ETF) in India.
Torus Kling Blockchain is targeting $1 billion in assets under management (AUM) in the first two years from customers participating in blockchain-backed products through ETFs, and discount certificates tracking the metaverse-related large-cap stocks in the US and European markets. Discount certificates are debentures that can be used to buy an underlying security at a discount to the current market price. These instruments have pre-fixed price caps, and this limits potential upside.
Torus Kling Blockchain IFSC plans to launch the ETF in Gift City by the end of the financial year, subject to IFSCA and other regulatory approvals.
Cosmea, established in 2020, is a financial services startup promoted by former Reliance Capital CEO Sam Ghosh, while Kling Trading India is an SaaS cloud services company that provides services in treasury, risk, trade finance using AI and Machine Learning. India INX is India's first international exchange in International Financial Services Centre (IFSC). The deal will make it the first crypto-backed futures ETF outside the US.
The deal dictates the various roles the entities involved with ETF will be playing. Cosmea will oversee distribution, and Kling will be the technological partner. INX India will be the exclusive trading platform for the crypto-backed ETF. Torus Kling blockchain will provide liquidity to India INX through smart order routing.
“New asset class is tip of the iceberg. Exchange trade products allow trading through regular investment accounts, bypassing the hassle and security concerns of cryptocurrency exchanges”, said Krishna Mohan Meenavalli, CEO, Torus Kling Blockchain IFSC.
The ETF futures are going to launch under the sandbox construct of the IFSC, with the product being subjected to all IFSC regulatory approvals.
V Balasubramaniam, Managing Director & CEO at India INX, said in a statement, "India INX at GIFT IFSC is looking at exploring the launch of Digital Asset-based products and has already made an application to IFSCA under Regulatory Sandbox. This is a part of our product innovation initiative to benchmark offerings with other international financial centres. We will be launching products in these new-age assets in compliance with the prevailing laws after receiving all required post regulatory approvals."
As per an Economic Times article, In India, AUM in ETFs in India has almost doubled to Rs 2.9 lakh crore in FY21 from Rs 1.5 lakh crore a year previously. Also, Exchange Traded Products (ETPs) have acquired more than $1 trillion representing 15 percent of all fund assets globally.