Citigroup Planning To Make Crypto Investments Less Risky For Institutional Investors

Investing, News | September 10, 2018 By:

Financial services giant Citigroup has reportedly developed a new mechanism that makes cryptocurrency investments less risky.

Citing sources familiar with the latest development, Business Insider reported that Citigroup has created a “Digital Asset Receipt” (DAR), which will offer institutional investors a direct way of making crypto investments without the need to own them. The DARs would reportedly function similarly to American depositary receipts (ADR), which are used to trade baskets of non-US stocks. The report said that a custodian will be responsible for holding the crypto assets.

“Once the receipt is issued, the bank will alert the Depository Trust & Clearing Corp,” the report said. “That lends an important layer of legitimacy and gives investors a way to track the investment within a system that they’re already familiar with.”

While the sources said that the banking giant is already reaching out to potential partners, the project’s current stage of development and launch plans remain uncertain. It is also unclear how US regulators would view the instrument. So far, the US Securities and Exchange Commission (SEC) has rejected all exchange traded fund (ETF) proposals for cryptocurrencies. On Sunday, the SEC temporarily suspended trading in two crypto exchange-traded notes issued by Swedish firm XBT Provider AB, citing investor confusion regarding the assets.