Citigroup (C), a major American multinational investment bank and financial services corporation, is reportedly developing a cryptocurrency investment product that would fall within current regulatory frameworks as a security.
According to breaking reports by the ICO Journal and Business Insider that cite individuals familiar with the matter, Citigroup is creating what it’s calling a digital asset receipt (DAR), an investment product that is similar to the American depository receipt (ADR) that allow domestic investors to invest in global equities. ADRs traditionally work as proxies where a foreign stock is held by a bank and then is issued to investors as a depository receipt.
Citigroup is one of the world’s leading issuers of ADRs and has been in the business since 1928. With cryptocurrencies, Citibank will issue DARs with the actual assets being held in a custodial service and the bank will notify the Depository Trust & Clearing Corp, a well-regarded Wall Street middleman that provides clearing and settlement services, whenever a receipt is issued.
This system would fully comply with current regulatory frameworks and ultimately provides a layer of legitimacy that could facilitate adoption from major institutional investors.
While the report doesn’t indicate where the project is in its development, another anonymous Citigroup source confirmed that the bank has been working on the DAR concept for over 60 days. Additionally, the insider along with a third source from a crypto hedge fund confirmed that the bank is currently circulating documents internally that outline the planned security product.
Citi is circulating a plan that will make it the first bank to (nearly) trade physical Bitcoin. The vehicle that is being proposed is a digital ADR with the bank acting as agent. The info is being passed around, internally, as part of an investor presentation of some sort. Very interesting concept.
The new investment vehicle could quickly gain traction as other top Wall Street banks like Goldman Sachs look for more client-friendly ways to profit from cryptocurrencies beyond derivatives like futures contracts.
More: EXCLUSIVE: CITIGROUP SOURCE: Citi Formulating Bitcoin ‘Security’ Product, Rushing To Beat Rivals To Market
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Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.