Cryptocurrency: Will it be prudence or missed opportunity for mutual funds?

Kolkata: Mutual funds pool in funds from the public to invest in assets that appreciate and people participate in these funds to benefit from the capital appreciation opportunities they offer. Each category of asset generates a different band of return. While equities are usually regarded to be the fast appreciating asset, over the past few years, cryptocurrency has generated in returns which can leave equity proponents red in the face.

The point is no mutual fund in India is allowed to invest in cryptocurrencies. The introduction of mutual funds to cryptocurrency is not very old though with the first Bitcoin ETF in the US beginning to trade in October 2021 at the New York Stock Exchange. In 2024 and 2025, major US asset managers such as BlackRock (iShares Bitcoin Trust), Fidelity, VanEck, and Calamos have launched Bitcoin ETFs or Bitcoin-linked funds in the US.

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However, given the lack of clarity and the disapproval of the Indian policymakers of cryptocurrency it is unlikely that mutual funds in the country will be allowed to invest in this asset anytime in the foreseeable future.

It is against this background that Akshat Shrivastava, founder of investment training and advisory Wisdom Hatch, said that if Bitcoin turns out to be digital gold, mutual funds in this country will be treated as having missed trillion-dollar wealth creation opportunities. On the other hand, if cryptocurrency crashes or faces regulatory action/ban, the conservatism will be lauded as prudence.

Bitcoin had a meteoric rise in the past few years. For example, this crypto asset was valued at $32,022 at the beginning of April 2022. It climbed to $116,404 in the first week of August 2025 -- a rise of 3.63 times. Srivastava noted that the asset has appreciated 11,400% in the past 10 years.

"Wealth Funds in the Middle East, Norwegian wealth funds and even governments are buying BTC. Either Indian MF are extremely smart or extremely stupid. Next 10 years will prove which way this story is heading," Shrivastava wrote on social media. He also noted that no mutual fund in this country is allowed to invest in cryptocurrency. It goes without saying that with this rate of appreciation, any mutual fund investing in cryptocurrency would have generated a very high rate of returns.

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It is expected with Trump pursuing his promise of turning the US into a global crypto powerhouse, cryptocurrency is likely to get a further boost in the days ahead. The Trump administration has already brought crypto legislation and has even announced the setting up of a strategic Bitcoin reserve in the US.

Prominent Indian asset management companies such as ICICI Prudential and Nippon Life India have said that they will stay away till the regulatory cloud dispels in India. In India, cryptocurrencies are viewed with suspicion by the authorities. The RBI and finance ministry are of the view that it is too volatile an asset and, most important, since these are borderless these can be easily used for subversive activities, even funding terrorist activities, narcotics and laundering money. The Union government, however, levies a 30% tax on income from crypto assets. Both the government and the banking regulator discourage people from investing in cryptocurrency, though there is no legal obstacle in India and a number of investors put their money into this asset.