Since November 2021, investors in India have been able to take positions on the cryptocurrency market without having to “put skin in the game,” which means that they have the option to actively participate in the market without holding tokens as such.
On Wall Street, the expression “skin in the game” refers to tangible exposure to risk; in other words, conducting the direct acquisition of a financial asset you intend to hold without intermediaries.
Even though the majority of cryptocurrency trading activity is generated by active speculators who constantly look for opportunities to profit from market fluctuations, most of them have “skin in the game” because they use fiat currencies to acquire digital tokens, which are ultimately exchanged back to fiat when it is time to take profits.
Bitcoin investors who hold onto their tokens for a long time definitely have skin in the game, but they are also exposed to market volatility, and they are certainly at the mercy of currency exchange prices.
EFT Is Coming to India
Indian investors are no longer obligated to put skin in the game in order to profit from the cryptocurrency markets. Thanks to an approval issued by the Securities and Exchange Board, the Invesco CoinShares Global Blockchain exchange-traded fund (ETF) investors can now dip their toes in the crypto waters without having to worry about whether their tokens will hold up during bear markets or periods of high volatility.
Investing in this ETF, which can be openly traded on the National Stock Exchange, does not involve holding any digital currencies at all; managers of this fund invest in companies dedicated to cryptocurrency and blockchain development.
If you are already familiar with how ETFs work, the only thing left for you to do before acquiring shares of the Global Blockchain ETF is to evaluate its prospectus and decide whether this is a trading instrument you would like to see in your portfolio.
If you do not know about ETFs, the first thing you should know is that they are a lot like mutual funds, but their structure is not really the same.
Mutual funds invest a predefined amount in a basket of securities whose value changes in the market; while ETFs, on the other hand, take positions in securities listed on certain stock exchanges by employing what is known as a composite tracker strategy.
ETF shares function in the same fashion as equity securities in the sense that they can be bought and sold as if they were company stock.
In the specific case of the Global Blockchain ETF, it is structured to track the shares of major blockchain economy companies such as MicroStrategy and CoinBase. You could very well copy Invesco’s portfolio by looking at its prospectus, but management of funds and assets therein would be entirely up to you.
It could be argued that this ETF does not technically provide too much in the way of direct access to cryptocurrencies; however, SEB regulators in India are already evaluating applications for new ETFs based on Bitcoin and Ether futures that would be listed on the India INX trading platform, thus putting investors a bit closer to actual tokens without actually holding them or managing them as currency pairs.
