Anonymous sources have leaked today a new report indicating the CitiGroup and its related banks are developing a cryptocurrency-related product that will grant institutional investors the ability to access and trade in crypto markets.
The multinational bank as per the report will be utilizing a new version of the American Depository Receipts (ADR), a type of security, to allow such direct trades with crypto to occur. This new version will be called a “Digital Asset Receipt” (DAR) and will function similarly to ADR in terms of legality.
In the same way that institutional investors can put their money in foreign stocks using ADR, DAR will allow these same investors to put their money in cryptocurrencies and trade directly. For example in the case of ADR, a foreign stock is held by a bank which then issues a depository receipt; alternatively, with DAR, a cryptocurrency is held by a custodian and the DAR is issued by Citigroup.
Despite the bombshell report, there was no timeline for the rollout of this new vehicle for institutional trading and crypto markets were not moved by the news. A representative for the New York-based bank declined to comment on the plan.
It’s still unclear however how U.S. regulators will respond DARs. As of now, the Securities and Exchange Commission has taken a cautious approach towards cryptocurrencies generally speaking. Just yesterday, the SEC temporarily suspended two crypto-related exchange traded notes. Their reason was over supposed “investor confusion” which makes an ETF decision later this month all the less likely.
Currently, it is difficult for institutional investors to purchase cryptocurrencies because of the lack of custodial services for these assets. CitiGroup, as per the report, is clearly trying to position itself as the first in this space. In a rush to see who will offer such services first, many banks are working behind the scenes to make this happen. And this was confirmed today by this anonymous report.
Interestingly enough, CitiGroup earlier this year banned purchases of Bitcoin and other cryptocurrencies via its credit cards. However, it seems the bank has done a 180 and now might be more open to the digital asset. By buying and selling receipts, CitiGroup hopes to offer a safe and efficient means of buying and trading Bitcoin which could send shockwave throughout the entire banking industry.