"Mudrex Brings U.S. Bitcoin ETFs to Indian Investors, Targeting Both Retail and Institutional Clients"

California-based crypto investment platform Mudrex, backed by Y-Combinator, has unveiled plans to offer U.S. spot bitcoin exchange-traded funds (ETFs) to investors in India, spanning both institutional and retail segments.

CEO and co-founder Edul Patel emphasized the significance of this initiative, particularly for institutional clients, stating in an exclusive statement, "this is much more valuable to institutions, as this was already available to retailers."

In its initial phase, the platform will introduce four spot ETFs, featuring offerings from BlackRock, Fidelity, Franklin Templeton, and Vanguard. Operating through a subsidiary registered with the Intelligence Unit of India, Mudrex has also established a presence within the European Union, holding licenses in Lithuania and Italy. Transactions will be facilitated through U.S. broker partners, with the spot bitcoin ETF service managed by its Indian subsidiary.

While retail clients have had access to spot bitcoin ETFs through U.S. stock investing companies, Mudrex claims to be the first in India to extend such services to institutions, marking a significant milestone for the firm.

Patel elaborated on the legal framework enabling Indians to invest in these ETFs under the Liberalised Remittance Scheme (LRS), allowing diversification of portfolios through Bitcoin. Under the LRS, annual overseas investments of up to $250,000 are permitted, with Mudrex setting investment thresholds between $5,000 and $250,000.

Furthermore, Patel highlighted the importance of robust banking relationships in the U.S. for seamless transactions under the LRS. Approximately 20 out of 350 institutions collaborating with Mudrex have initiated the process of joining, with anticipated investment volumes featuring an average ticket size of $110,000.

This development unfolds against the backdrop of a complex regulatory landscape in India, where both the central bank and the government have adopted varying positions on cryptocurrency. While the Reserve Bank of India (RBI) has voiced concerns over crypto, citing potential risks to the national economy, the Finance Ministry has taken measures to integrate crypto service providers into the regulatory framework, with a focus on safeguarding investors and the economy.

Amidst this regulatory divergence, the Indian government has intensified efforts to combat illicit activities in the crypto sphere. The latest action from the Enforcement Directorate saw the filing of a charge sheet against 299 entities, underscoring the government's resolute stance against the misuse of digital currencies. Notably, individuals of Chinese origin implicated in a cryptocurrency scam were targeted under the stringent Prevention of Money Laundering Act (PMLA).

In contrast to the stringent regulatory oversight of cryptocurrency transactions, the RBI is embracing digital innovation through the development of the central bank digital currency (CBDC), known as the digital rupee. Governor Shaktikanta Das's announcement of plans to explore offline functionalities for the digital rupee represents a significant stride toward enhancing financial inclusion and accessibility. This initiative aims to extend the benefits of digital currency to areas with limited or no internet connectivity, thereby expanding the reach of digital financial services nationwide.