Citigroup Reportedly Eyes Crypto With Technique Used in Trading Foreign Stocks
Institutions looking toward crypto services have been rubbing their heads on how best to facilitate investing in digital assets. Accordingly, investment and financial services bank Citigroup is reportedly forging a receipts-based route, wherein clients will be able to invest in a “digital asset receipt” but won’t need to hold cryptocurrency themselves, a person familiar with the matter told Bloomberg.
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DARs a Riff on ADRs: Toward a New Wave of Bitcoin Bets?
A product U.S. traders use to trade foreign stocks unavailable in America is reportedly being riffed on by Wall Street powerhouse Citigroup in a bid to make investing-by-proxy in cryptocurrencies a mainstream reality.
As such, Citigroup’s apparently working on digital asset receipt products, or DARs, themselves being modeled upon American depository receipts — an investment vehicle first created in the 1920s to streamline Americans’ access to trading foreign companies’ stocks.
From the details outlined, and if brought to fruition, a Citigroup DAR would work akin to how an ADR does, then, with invested funds being tied to cryptocurrency assets held in a “separate custodian” service.
Such a dynamic means traders and investors could invest in cryptocurrencies without having to personally manage the digital assets. How U.S. regulators would approach this kind of crypto-based product is a standing question for now. Unquestionably, if Citigroup is serious about these receipt-based products, they’ll do everything in their power to keep the effort in-bounds legally to stay on track to be first-movers. But what the firm plans and what the U.S. Securities and Exchange Commission reckons may end up being two different things, at least in the short-term.
As for who would serve as Citigroup’s custodian solution, that also remains to be seen. Interestingly, the DAR news comes after reporting last week that Goldman Sachs was heightening the prioritization of its in-progress crypto custody service.
With SEC in Mind, They Just Slapped a Suspension on Bitcoin, Ether Trackers
The SEC announced on September 9th they were enforcing a two week suspension against two cryptocurrency-based securities trackers, the Bitcoin Tracker One and Ether Tracker One.
The Securities and Exchange Commission announced the temporary suspension of trading in the securities Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) commencing at 5:30 pm EDT Sept. 9, 2018 and terminating at 11:59 pm EDT Sept. 20, 2018. https://t.co/5z1vEYFBFB
— SEC_News (@SEC_News) September 9, 2018
The commission cited the rationale for the suspension as “confusion amongst market participants regarding these instruments.” The SEC determined the products were being mischaracterized as exchange-traded funds. Rather, the two trackers in question are exchange-traded notes available on the Nasdaq Stockholm exchange.
The suspension will remain in place until the close of September 20th. And the Commission is watching.
What’s your take? How do you think DARs would affect the cryptoverse? Sound off in the comments below.
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