Indian market watchdog warns mutual funds to stay away from crypto assets at least until regulations take effect

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  • The Securities and Exchange Board of India (SEBI) has warned mutual fund not to launch crypto-centric offers until the regulations come into force.
  • India’s cryptocurrency bill was due to be discussed in the previous session of parliament earlier this month, but was not presented.
  • Invesco Mutual Fund has already delayed the launch of its crypto-based exchange-traded fund (ETF) and Navi Mutual Fund’s application is still pending SEBI’s approval.

India’s market watchdog Securities and Exchange Board of India (SEBI) wants mutual funds to wait before coming up with new fund offerings (NFOs) based on crypto assets.

According to SEBI chairman Ajay Tyagi, mutual funds should not make such investments until a law is put in place to regulate the industry.

And, as it stands, India’s Cryptocurrency and Official Digital Currency Regulation Bill (2021) is still awaiting Cabinet approval – the country’s highest decision-making authority led by the Prime Minister. Minister, Narendra Modi.

“It is prudent for regulated entities with exposure or concentration in public markets, or any form of public solicitation, to await further clarification regarding the legality or definition of digital assets as assets or securities or products. base in India, “Nitin Sharma, partner at Antler India and blockchain is the head of Antler Global, Business Insider told Business Insider.

Caught in limbo

SEBI’s warning comes after asset management firm Invesco Mutual Fund delayed the launch of its blockchain fund – the first of its kind in India – due to legislative uncertainty, even though they already have the seal green from SEBI.

“Many HNIs, family offices and retail investors will be drawn to such options as they are more comfortable with indirect exposure right now, even at a cost, rather than dealing directly with digital assets. “said Sharma.

Invesco is not the only mutual fund in India that wants to immerse its two in the crypto space. Earlier this month, Navi Mutual Fund also filed a project with SEBI for a Blockchain Index Fund of Funds (FoF), which will track the IndxxBlockchain index.

The IndxxBlockchain index, however, does not directly track crypto assets. Instead, it tracks mainstream companies like Nvidia, Advanced Micro Devices, and others that have crypto business. The index also includes Indian IT giants like Infosys, Wipro and TCS.

“As this space matures, we can certainly expect more mutual fund companies to offer blockchain-specific funds. These funds don’t necessarily need to have direct crypto exposure, ”Edul Patel, CEO and co-founder of Mudrex told Business Insider.

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