Citigroup has reportedly come up with a new way to trade cryptocurrency. According to a Business Insider special report, the bank has come up with “a new mechanism to invest in cryptocurrencies.” Citing people familiar with the deal, the online publication reports Citigroup creating Digital Asset Receipts (DARs).
As BI reports, the DAR behaves in a similar way to an American Depository Receipt (ADR). The ADR is a certificate with evidence that an investor owns a certain number of shares in an exchange. Depository receipts date back to the early 20th century. Citibank still issues them today.
Citigroup creating digital asset receipts could help bring Bitcoin to the forefront
The report says that Citigroup creating digital assets receipts is a great move towards widespread cryptocurrency adoption. One of the people familiar with the move said, “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.”
Industry players are confident that the new product will help allay crypto fears that are ubiquitous on Wall Street. However, at the moment, regulators are yet to comment on the product. This means the regulatory nature of the product is still unclear. Further, the market is still waiting for the release data of the product.
Rejected ETF applications
Whether the product will pass regulatory tests is unknown. In the recent past, several companies have put forward applications for exchange-traded funds which all are so far not available. All the rejections cite price volatility, hacks and scams that happen often in the crypto market. In one instance, the US Securities and Exchange explained:
“Surveillance-sharing with a regulated market of significant size related to bitcoin is necessary to satisfy the statutory requirement that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”
Notably, Citigroup has not been visible until now in cryptocurrency circles. The bank seemed to go in tandem with the general crypto sentiment on Wall Street. However, in Citigroup creating digital asset receipts for Bitcoin, cryptocurrencies will achieve an important milestone.