- Alumni from Citi say their new offerings, known as Bitcoin depositary receipts, will not need the SEC’s nod and will allow investors to invest in BTC like they would foreign stocks.
- The founders say the receipts will complement the Bitcoin spot ETFs and will be for qualified institutional investors who don’t want to deal directly with BTC for security and regulatory reasons.
While every investor focuses on the pending approval of the first Bitcoin spot ETF in the US market, a group of former Citigroup executives are offering an alternative investment that they say doesn’t require authorization from the securities watchdog.
The three Citi alumni—Bryant Kim, Ankit Mehta and Ishaan Narain—are the founders of Receipts Depositary Corporation (RDC), a company set to issue Bitcoin depositary receipts. The trio was in the Citi team charged with exploring depositary receipts for varying asset classes back in 2018.
These new instruments will be similar to American depositary receipts, which allow Americans to invest in foreign stock. These instruments, issued by American banks, represent shares in foreign companies and can be traded on American stock exchanges.
While a spot ETF will be revolutionary for American Bitcoin investors, there is still a vast untapped market for investors who prefer not to deal directly with the crypto. These investors are concerned about the unregulated nature of the crypto and the security risks that a spot ETF exposes them to. But with the receipts, the investors can steer clear of direct investment but still enjoy BTC’s profit potential.
In an interview, RDC co-founder Mehta stated:
We are really a conversion tool for asset owners today, whether they are hedge funds, family offices, corporations, large institutional investors, that want to take their Bitcoin and convert it into a DTC-eligible security and enjoy direct ownership in the US clearances.
Who Needs the SEC?
RDC has partnered with Broadridge Corporate Issuer Solutions, a New York-based financial services giant Broadridge Finance subsidiary, which will act as the transfer agent. Anchorage Digital Bank National Association, a US-chartered crypto-focused trust bank, will custody the underlying BTC tokens.
While he says his product has a significant and untapped market, Mehta acknowledged that a spot BTC ETF will be monumental for the sector. As CNF has reported, the SEC is expected to approve the BlackRock ETF any time now, with the other 13 set to follow suit. However, there’s no guarantee with the SEC, especially under the anti-crypto chairman Gary Gensler. Additionally, the depositary receipts will be complementary to the ETF and will mainly target institutions, says Mehta.
“Bringing market standards from traditional finance — like depositary receipts — to the digital-asset ecosystem will be a major theme heading into 2024,” commented Anchorage Digital President and co-founder Diogo Monica.
He added:
The majority of traditional institutions want direct exposure to Bitcoin, but some are still on the sidelines due to regulatory uncertainty. For these players, using Bitcoin depositary receipts unlocks the best of both worlds.
