U.S. multinational bank Citigroup is developing a cryptocurrency product to give institutional investors access to crypto markets without owning cryptoassets directly, anonymous sources told Business Insider September 9.
Citigroup, which had previously taken a centralized approach to cryptocurrency, will reportedly use a revamped version of the American Depositary Receipts (ADR) – a type of security issued since the 1920s that represents securities of a non-U.S. company – to let investors indirectly trade crypto.
The end product will be known as a Digital Asset Receipt (DAR), the sources claim.
According to the “people with knowledge of the plans,” a DAR “works much like” an ADR, both “giving U.S. investors a way to own foreign stocks that don't otherwise trade on U.S. exchanges.”
“The foreign stock is held by a bank, which then issues the depository receipt. In this case, the cryptocurrency is held by a custodian and the DAR is issued by Citigroup,” Business Insider explains, paraphrasing the sources.
While no timeframe was mentioned for a potential rollout and Citigroup declined to comment, the news comes at a pertinent time for cryptocurrency markets.
As Cointelegraph reported, September 9 saw U.S. regulator the Securities and Exchange Commission (SEC) issue a surprise temporary ban on the first crypto-related exchange-traded notes (ETNs), citing “confusion” among investors.
At the same time, the fate of multiple Bitcoin and Ethereum exchange-traded funds (ETFs) remains a hot topic of conversation, the SEC having rejected a string of Bitcoin ETF applications in August.
