Former Citigroup Inc. executives will offer Bitcoin (BTC)-backed securities.
According to a Bloomberg report published on January 4, former Citigroup executives will offer BTC-backed securities that they say will not require approval from US regulators. With this bold step, the issuer will establish a so-called “Receipts Depositary Corporation” (RDC).
The securities are Bitcoin depository receipts, which function similarly to American depository receipts that represent foreign stocks. According to the company, the BTC DR offering will provide institutions with access to securities via US regulated market infrastructure and will be settled through Depository Trust Co.
The key difference with a Bitcoin ETF is that depository receipts allow qualified institutions to own BTC directly, which RDC says will be the first of its kind to do so.
According to the issuers, purchasing Bitcoin is not preferred for some regulated institutions as cryptocurrency markets face challenges including security risks and regulatory uncertainty. The RDC proposal envisions a product that “complements” the Bitcoin ETF.
According to Ankit Mehta, co-founder and CEO of RDC and former Citigroup executive:
“We are now a conversion tool for asset owners, whether they are hedge funds, family offices, corporations or large institutional investors, who want to take their Bitcoin and convert it into a DTC-ready security.”
Ankit Mehta, RDC co-founder and CEO
The new product could become popular among investors given the hype around investing in BTC. The most significant difference with BTC DR is that it does not require approval from the US Securities and Exchange Commission (SEC), issuers say.
Given the challenges and numerous considerations currently being discussed by the SEC regarding the spot Bitcoin ETF, regulatory uncertainty and risk aversion to traditional financial markets, the group's latest issuance could provide some institutional investors with an opportunity to allocate capital into crypto markets .
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