NI Bureau
Imagine creating wealth from Bitcoin without directly owning it and without worrying about hacking and custody. That’s the promise of crypto asset exchange-traded funds (ETFs). Globally, crypto ETFs have reshaped financial markets by offering regulated access to digital assets. These ETFs—tracking Bitcoin, Ethereum, or broader digital asset baskets—are traded on reputed stock exchanges like any other product, giving investors a secure, liquid, and transparent avenue for exposure. Since India introduced ETFs in 2002, their AUM has grown exponentially, reaching ₹3.16 lakh crore by 2021. Meanwhile, global crypto ETFs have surged even faster, with Bitcoin ETFs amassing over ₹8.6 lakh crore in assets since approvals began in January 2024.
Also read: Crypto Tax Dilemma: Can Striking the Right Balance Unlock Web3’s Full Potential?
Crypto ETFs have surged worldwide, reshaping how investors access digital assets. In January 2024, the US SEC approved 11 spot Bitcoin ETFs. It is interesting to note that BlackRock’s iShares Bitcoin Trust has overtook its own gold ETF in record short duration. In Europe and Canada, diversified crypto ETFs have seen strong uptake. A PwC-AIMA report shows 47% of traditional hedge funds now invest in digital assets. Major institutions like HSBC, Goldman Sachs, and BlackRock are building custody and trading infrastructure, responding to surging demand. Recently released survey report from EY-Parthenon and Coinbase finds that 83% of institutional investors plan to increase their exposure to crypto this year, and 59% plan to allocate more than 5% of their AUM to crypto in 2025, a clear sign that it is moving beyond a niche asset class.
India, however, remains on the sidelines. SEBI has previously advised mutual funds to avoid crypto exposure until regulatory clarity emerges. This caution leaves Indian investors with no regulated path to access crypto assets, pushing many toward offshore or unregulated alternatives. The absence of a domestic crypto ETF limits both investor protection and innovation. Meanwhile, global asset managers capitalize on new demand, leaving Indian firms a step behind.
ETFs offer a secure bridge for crypto investment. Unlike holding assets on volatile exchanges, ETF custodians—such as those used by BlackRock—employ robust, institutional-grade security. For risk-averse investors and large institutions, this structure is key.
India need not leap into full-fledged crypto exposure. It can start with regulated ETFs tied to Bitcoin futures, global crypto companies, or foreign ETFs—models already in place elsewhere. In 2021, SEBI even approved a blockchain-themed fund of funds, however it was shelved amid regulatory uncertainty.
By allowing well-regulated crypto ETFs, SEBI can meet growing investor demand, reduce offshore capital flight, and bring crypto activity under tax and compliance nets. With appropriate safeguards—like custody requirements, retail exposure caps, and disclosure norms—India can balance innovation with protection. The global trend is clear: crypto ETFs are becoming mainstream. India must decide whether it wants to restrict wealth creation for its citizens or lead safely from within the regulatory fold.
