New York-based Citigroup bank looks as though it may have unearthed the most direct way yet for companies to take part in crypto investing without actually owning the currency.
According to sources who have seen the plans that are being suggested, the project would essentially put cryptocurrency within current regulatory guidelines and provide Wall Street investors such as hedge funds and asset managers with a less risky method of investing in digital assets.
Crypto stock would be held by a “custodian”
The crypto investing project being developed by Citigroup centers around an instrument that the bank is calling a Digital Asset Receipt, or DAR.
It works in much the same way as an American Depository Receipt (ADR) which has been available to US investors for decades as a means to owning a foreign stock that doesn’t otherwise trade on US exchanges.
The foreign stock is held by a bank, with a depository receipt being issued to the investor.
In the case of crypto investing, the stock will be held by a custodian, and Citigroup provides the DAR.
The bank alerts the Depository Trust & Clearing Corp, which is a Wall Street service provider that acts as a ‘middleman’ of sorts and provides clearing and settlement services upon issue of the receipt.
This procedure will provide a layer of legitimacy and allows investors a way to track investments within a system that they are already familiar with according to sources.
Reaching out to potential partners
A joint effort between the depository receipts services team and the banks capital markets origination team, it’s unclear at this time what stage Citibank is at as far as development of the crypto investing project, but it has been suggested that they’ve already begun reaching out to potential partners.
Up until now, we’ve seen Wall Street proceed with caution when it comes to crypto investing, and as a result, Citibank has also been reluctant to involve themselves as much as the likes of Morgan Stanley and Goldman Sachs.
Times seem to be changing though, with Citibank looking to hire a vice president and senior vice president to look into risks associated with money laundering in bitcoin as well as other cryptocurrencies.
As of the time of writing Citigroup had declined to comment on any plans the bank has for crypto investing.
Lover of all things crypto, blockchain and AI, professional tech scribe & part of the editorial team at Crypto Disrupt.