New York-based bank Citigroup has reportedly developed a new and safer way for institutional investors to enter the cryptocurrency market, without actually owning any digital coins.
Introducing the Digital Asset Receipt
According to sources familiar to the matter, Citigroup will introduce the so-called digital asset receipt (DAR), Business Insider reports. It’s supposedly intended to work like the traditional American Depository Receipt (ADR), which allows U.S. investors to own foreign stocks which don’t trade on U.S. exchanges. In the case of the ADR, the foreign stock is held in custody by a bank which issues the depository receipt.
Similarly, in the case of the DAR, the cryptocurrency will be held by a custodian while Citigroup will be issuing the asset receipt. A person familiar with the plans of Citigroup said:
The bank would alert the Depository Trust & Clearing Corp., a Wall Street middleman that provides clearing and settlement services that it issued a receipt. 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.
Good News at a Good Time
While a Citigroup spokesperson has declined to comment, the report, should it be confirmed, comes at a rather critical moment.
Citigroup is a major bank which has been a lot less active in the field of cryptocurrencies compared to others such as Goldman Sachs, for instance.
Its involvement in the market is undoubtedly important, more so with a product which allows for direct institutional-grade investments.
The entire cryptocurrency market has been in a serious decline in the last 7 days, losing upwards of $40 billion since September 5th. At the time of writing, Bitcoin (BTC) trades at $6,357.44, losing upwards of 15 percent in the last week.
Furthermore, Live Bitcoin News reported that the SEC has temporarily suspended the trading of Bitcoin Tracker One and Ether Track One because of the “lack of current, consistent and accurate information.”
Do you think Citigroup’s involvement in the cryptocurrency market will have a positive effect? Don’t hesitate to let us know in the comments below!
Images courtesy of Shutterstock.