• Rich Indians are investing in spot BTC ETFs using their yearly remittance quotas.

  • The Central Bank of India has warned investors against trading cryptocurrencies.

  • Vested Finance has witnessed buy volumes exceeding $5.3 million.

Spot Bitcoin Exchange-Traded Funds (ETFs), approved on January 10 in the United States, have lured wealthy Indians who are making use of their yearly remittance quotas to trade these funds, irrespective of the country’s central bank’s warning against digital assets.

According to a report from Bloomberg, affluent Indians are leveraging the Reserve Bank of India’s Liberalized Remittance Scheme (LRS), which allows citizens to remit up to $250,000 annually, seizing the opportunity to diversify their portfolios and gain exposure to cryptocurrencies.

Platforms like Vested Finance, catering to Indian investors seeking overseas investment opportunities, have witnessed a surge in demand for Bitcoin ETFs. With trading volumes exceeding $5.3 million, predominantly fueled by buy orders, it’s evident that there’s a strong appetite for these ETFs among Indian investors.

It is important to note that US spot Bitcoin ETFs have witnessed more than $12.3 billion in inflows since their inception, despite the significant outflow witnessed on Tuesday. 

On the other hand, Viram Shah, Chief Executive Officer of Vested Finance, emphasized that approximately 70% of ETF traders are high-net-worth individuals, enticed by the tax advantages offered through the LRS. 

This contrasts sharply with India’s stringent taxation regime for cryptocurrencies, which includes a flat 30% tax on profits and a 1% TDS on trading, implemented in 2020 to dissuade local participation in the crypto market. Shah added that,

”For long-term holders, the taxation can be reduced to below 20% on capital gains, unlike the flat 30% and 1% TDS applicable when investing directly through crypto platforms,”

Rather than deter investment, these high taxes have prompted many Indian investors to explore offshore options, such as investing in Bitcoin ETFs through the LRS. 

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