I understand the regulatory implications for the same are not clear for most of it, but since it recognized instrument in US and other countries (and we have MF for foreign exchanges) why cant big players like banks(ICICI, HDFC) jump on this asset class…
I mean if you look at it this is the exact place where Retail investors do not have enough knowledge of it and need expertise of these enterprises…
Instead of having MF of the same stocks with 100 different projection lenses, this seems to be a category with seems to be explosive(both + or - ) and give some amazing returns…
crypto is a dangerous investment, you loose your key or someone steals your coins, no gov agencies has power to get it back for you, its gone forever. why would MF risks peoples money on unregulated instrument?
But anyways, to answer your question, MFs are regulated entities and what type of funds can be offered is tightly controlled by SEBI.
So a big player cannot decide that this is a great idea let me start a fund on this, without seeking approval first. And with RBI and FM making it clear multiple times that Crypto is not Kosher, I doubt anyone is going to get an approval to start it.
Just because it is recognized in US does not mean it is allowed in India.
As such weed is legal in lot of US states and European countries. Does not mean ICICI or HDFC can start selling weed in their branches
Thats streching the example, beyond its meaning
What i meant was MF AMC are allowed to invest in foriegn security which SEBI has zero control on… so why cant in the name of diversification add this instrument…
I know my comments would be useless, cause the regulator has its claws on it, which is weird cause it recognizes its gains for taxation purpose but not as investment instrument…
Coming to the nature of risk for this investments they can be compared to be volatile like micro caps and be classified as speculative insturment, and people should be carefull with it…
India is a place for regulations on regulations, i would wonder if the SEBI would ever consider the derivative ETFs first to have retail investors invest in them. They are in same footing as the crypto currencies. There are new crypto ETFs in America right now and would be interesting to see if SEBI would consider allow a small percentage of funds to invest in overseas traded crypto ETFs.
It is not about control. SEBI allows that because SEBI knows that these foreign securities are regulated by regulators in foreign countries. There are stock markets to handle the trades, custodians to hold these shares and Banks to assist with money transfer. All of these are heavily regulated and clear cut responsibilities and accountabilities defined.
Crypto has none of these.
This is myopic view, simply comparing price voilatility and considering risks are same.
Crypto has multiple unknowns / risks.
Consider Recent Hack of WazirX. Overnight an exchange lost half the assets of customer it was holding and has frozen other half. And now customers are unable to get almost half billion USD.
And neither exchange, nor customers have any idea what needs to be done now.
That is like you waking up one day and realizing that half of your Micro caps stocks have vanished, and exchange is not allowing you to access other half. An unheard of scenario for Indian stock market.
So nope, risks are not same. And till the time there are so many grey areas, I doubt Regulator will think that starting a MF to allow common investor to invest in Crypto would be good idea.
Yes i agree crypto comes with heavy risks and may i say rewards as well, but then when did this fin industry stopped taking risks completely… they always up-ed their hedge-ing game…
This point exactly makes it a good point for Institutions like AMC’s to get into it rather than retail investors cause they have discipline and plans to make this work…
And for all the reasons you suggested above all risks are applicable with even cash instruments “The great cosmos bank hack”, etc… are also examples where things are lost even when they are regulated… finally its code and it can vanish any instrument since everything is digitized nowadays
But i get your point, its high risks and market may not be ready for it cause of the perception that precedes this instrument…
Not to forget, the utter lack of responsibility with the so called "socialized loss" strategy.
This strategy involved distributing the entire financial impact of the $230 million loss across all its users, regardless of whether they were directly affected by the attack or not.
Not to pop your bubble but India is far from being a developed market where new set of financial products (like a crypto ETF) could be introduced and popularized. Forget crypto ETFs, even existing equity and debt ETFs from big AMCs don’t have liquidity or being marketed well or even being remotely innovative in nature (for example Liquidcase - this is India’s only liquid ETF with growth plan. Took almost 20-21 years for someone to come up with a product that just works in that space and not give a headache to customer like have to redeem fractional ETFs and all that). It will take at least 10-15 years in my guess going forward for regulator to come up with proper frameworks even for basic things for every segment of market and another 10-15 years for the products built around those framework to work exactly as intended.
We don’t have any financial products that has exposure to any assets other than equity and debt (not all debt but just a part of the market is available to retail) and just 2 commodities (gold and silver) and REITs/InVITs (whose taxation has changed every year since it was started) . We need a governing body which thinks in a revolutionary way to make sure every class of asset is available to everyone. But we’re stuck with a governing body and a regulatory body whose tagline is “protecting retail” but changes there goalpost as they require. Anything other than set of equity and listed bonds (and related instrument like MF) are basically a big no for regulator and wash there hands saying “didn’t i say you so” when some bad incident happens.
So if you really want exposure to some other set of products which Indian markets won’t have even in coming decade, (be anti-national ) and take a look at US markets.
…