Investment banking giant Citigroup has reportedly come up with a new financial instrument for investing in cryptocurrencies called Digital Asset Receipt (DAR). DAR is rumored to be similar to an American Depository Receipt (ADR), which is a negotiable certificate allotted by a U.S. bank, representing specific number of shares in a foreign stock listed on a U.S. exchange.
Citing sources familiar with the matter, the bank plans to allow trading without direct ownership of the underlying coins by acting as an agent that would issue the DARs. Such a model could make it convenient for Wall Street’s institutional investors to invest into cryptocurrencies and meet the expectations of the financial regulators in the U.S, the sources implied.
Speaking about the model, the sources said that for the DAR issued by Citigroup, the cryptocurrency will be held by a custodian. It was suggested that Citigroup had planned to inform about the DARs to the Depository Trust & Clearing Corporation (DTCC), which operates as a Central Securities Depository (CSD) in the U.S.
As per industry experts, this project is an alliance between the depository receipts services team and the capital markets origination team of bank. Also, it is considered that the move is an ideal step for the bank, as it is one of the world’s leading issuers of ADRs.
Although Citigroup has been allegedly showing great interest in cryptocurrency trading, earlier reports had indicated that Josh Levin, a Citi analyst, had written a note to their clients stating that the investors should treat near-term crypto or blockchain associated predictions with some doubt while keeping an open mind.
According to the XBT Provider, Citibank’s UK brokerage platform had, in November 2017, started offering investors access to Ether Exchange Traded Notes (ETNs). Apparently, the rumors about Citigroup’s plans for offering DARs came on the same day when the U.S. Securities and Exchange Commission (SEC) announced the temporary suspension of trading in XBT Provider’s Bitcoin and Ether ETNs.
