- Former Citigroup Inc. executives plan to launch Bitcoin depositary receipts (DRs), providing an alternative to the anticipated Bitcoin Spot ETF and circumventing the need for SEC approval.
- The new Bitcoin DRs, akin to American depositary receipts for foreign stocks, aim to offer institutions direct access to Bitcoin securities.
Breaking New Ground in Cryptocurrency Securities
In a bold move, a group of former executives from Citigroup Inc. have announced their plans to introduce Bitcoin-backed securities, creatively sidestepping the regulatory purview of the U.S. Securities and Exchange Commission (SEC). This initiative has sparked widespread interest in the crypto market, especially amidst ongoing speculation regarding the SEC’s stance on a Bitcoin Spot ETF.
Understanding Bitcoin Depositary Receipts
The proposed financial instruments, named Bitcoin depository receipts (DRs), draw a parallel to American depositary receipts that represent foreign stocks. The venture, led by the startup Receipts Depositary Corporation (RDC), is gearing up to debut these Bitcoin DRs, specifically targeting qualified global institutional investors. This approach exempts the DRs from the traditional registration requirements under the Securities Act of 1933.
The Operational Mechanics
The BTC DRs are designed to grant institutional access to Bitcoin securities through a U.S.-regulated market framework, with the Depository Trust Co. providing the necessary sanction. Ankita Mehta, co-founder of RDC and a former Citigroup executive, envisions these DRs serving as a conversion tool for asset owners like hedge funds and family offices. The goal is to transform Bitcoin holdings into DTC-eligible securities, thus facilitating direct ownership within U.S. clearance systems.
Broadridge Corporate Solutions is slated to function as the transfer agent, with Anchorage Digital Bank National Association managing custody for the underlying Bitcoin in RDC’s offering. This innovative financial product has garnered support from notable investors like Franklin Templeton, BTIG, and Broadhaven Ventures.
A Complementary Product Amidst ETF Uncertainties
With the crypto industry’s eyes on the possible approval of spot Bitcoin ETFs, RDC’s Bitcoin DRs present a compelling alternative. They offer certified institutions a direct ownership route to Bitcoin, setting them apart from traditional ETFs which are typically redeemed for cash.
Bitcoin Market Reaction
At the time of this report, Bitcoin’s price has experienced a 5.23% decline over the past 24 hours, currently valued at $42,955.06. This downturn accompanies a weekly fall of 0.51% and a notable surge in 24-hour trading volume by 59.78%, hinting at heightened market activity and investor interest in the wake of this development.