A group of former Citigroup executives plans to offer Bitcoin-backed securities that they say do not require approval from U.S. regulators, according to a report published Thursday.
The move will see the startup issuer create what is known as a “Receipts Depositary Corporation,” or RDC. The securities will be Bitcoin Depositary Receipts that function similar to American Depositary Receipts representing foreign stocks.
According to the company, the BTC DR offering will provide institutions with access to securities through the U.S. regulated market infrastructure and will be cleared through the Depository Trust Co.
The key difference from a Bitcoin ETF is that depositary receipts offer direct ownership of BTC to qualified institutions, which RDC says will be the first product of its kind to do so.
The issuers say purchasing Bitcoin is not preferred for some regulated institutions, as cryptocurrency markets face challenges including security risks and regulatory uncertainty. The RDC proposal aims to provide a product that will “complement” the Bitcoin ETF.
RDC co-founder and CEO Ankit Mehta, a former Citigroup executive, says: “We are 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.”
The new product may become popular amid hype around investing in BTC. The major difference with BTC DR is that it does not require U.S. Securities and Exchange Commission approval, the issuers say.
This may give some institutional investors an opportunity to onboard capital into crypto markets amid regulatory uncertainty regarding a spot Bitcoin ETF.
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