Asset managers in India have proposed to launch funds solely comprising of investments related to blockchain, metaverse and internet of things (IoT), also called 'Metaverse funds', but market regulator Securities and Exchange Board of India (SEBI) may not give its approval yet, sources told Livemint.
“If any fund has an underlying which is not recognised as a security under the SEBI Act, the regulator will not clear it. Since the funds will be open for retail investors, SEBI cannot allow investments into unregulated assets/underlying,” a source close to the regulator told the publication.
Invesco Mutual Fund had pounced at the chance of bringing cryptocurrency into the ambit of mutual funds and submitted a proposal last year, only to withdraw it later as crypto investments were still new in India.
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SEBI went on to advise mutual funds to refrain from offering crypto investments as the regulatory framework for the same was still under process.
The metaverse is a digital space for people to socialise. A metaverse fund may comprise ETFs with a portfolio of companies involved in developing the metaverse, or companies that benefit from progress in the field.
Navi Mutual Fund is proposing a Metaverse ETF Fund of Fund (FoF), which will invest in foreign ETFs with exposure to companies involved in the metaverse. A similar proposal was placed by Aditya Birla’s blockchain and virtual digital assets (VDAs) ETF’s FoF, which will focus on global ETFs looking at the blockchain technology.
“While it is good that such new products in mutual funds are coming to the market for investors, it will boil down to how SEBI perceives it. We will not be surprised if these offerings go down the Invesco route. The regulator may also delay giving its observations,” the report quoted an expert as saying.
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