New York-based Citibank has created the most direct way to invest in cryptocurrency coins without actually owning them, according to people familiar with the projects. The structure would put the cryptos in the existing regulatory regimes and present Wall Street’s major investors, such as hedge funds and asset managers, a less risky way to invest in the emerging asset class.
Citi has developed an apparatus called Digital Asset Receipt or DAR. It functions as an American depositary receipt or ADR, which has existed for decades to allow US investors to hold foreign stocks that would not be traded on US stock exchanges. Foreign shares are held by a bank that issues the certificate of deposit.
In this case, the cryptocurrency is managed by a curator and Citigroup issues DAR, according to the people. One of the individuals said, the bank will aware Wall Street broker, Depository Trust & Clearing Corp., which offers clearing and settlement services upon issuance of a receipt. This gives an important layer of legitimacy and gives investors a way to track investments in a system with which they are already known, the person added person.
The project is an alliance amid the bank’s original team and the filing team, according to the people familiar with the matter.
The development phase of Citi and its launch are not clearly defined, but the bank has already started looking for potential partners. A spokesman for Citigroup refuses to comment on the bank’s plans.
Citigroup is among the major ADR issuers in the world. The bank began issuing deposit receipts in 1928 and won several awards for its service offerings, according to its website.
Wall Street is cautious of the blooming cryptocurrency market, repeated stock market and wallet hacks, vulnerable to large price swings, and the disgrace that makes criminal behavior feasible.
As a result, Citi has ceased from partaking in earlier efforts to get involved in the cryptocurrency markets.