Indians are using the Reserve Bank of India's Liberalized Remittance Scheme to invest in US spot Bitcoin ETFs, with 70% of investors being high net worth individuals.

The introduction of US spot Bitcoin ETFs in January has attracted institutional players, with total inflows surpassing $12.3 billion. Surprisingly, these ETFs have caught the attention of wealthy investors from India.

Even though the central bank of India has issued warnings about cryptocurrency investing, affluent investors in the country are still seeking exposure to Bitcoin ETFs through the remittance quota. The Liberalized Remittance Scheme, launched in January, allows Indians to remit $250,000 in a financial year.

Vested Finance, an Indian platform that enables investment in overseas securities, has seen significant demand for Bitcoin ETFs. Trading volumes of $5.3 million have been recorded, with two-thirds of the transactions being buy orders, according to Viram Shah, the CEO of Vested. Approximately 70% of ETF traders are high net worth individuals who are likely attracted by tax incentives offered through the Liberalized Remittance Scheme.

The Indian government's high taxation on crypto, implemented in 2020 with a 30% tax on crypto profits and 1% TDS on trading, was meant to discourage investors. However, this led many users to turn to overseas platforms, hurting local businesses. Buying BTC ETFs through the Liberalized Remittance Scheme has become a cheaper option for investors.

Mudrex, a crypto asset management platform, has teamed up with Vested to provide spot Bitcoin ETFs to clients. Edul Patel, the CEO of Mudrex, noted that Indian family offices are increasingly interested in using the Liberalized Remittance Scheme for investing in Bitcoin ETFs due to its compliance with tax regulations.

Despite warnings from the Reserve Bank of India, wealthy Indians are still showing interest in investing in US Bitcoin ETFs. RBI Governor Shaktikanta Das has reiterated the bank's stance on cryptocurrencies, even with the introduction of Bitcoin ETFs in the US.