Citigroup Proposes Low-Risk Cryptocurrency Investment Product For Institutional Investors

Despite the continuous fall of the crypto market since the beginning of this year, Wall Street giants have not turned away their attention yet! The latest report from Business Insider shows Citigroup proposing a less-risky product for cryptocurrency investments to lure institutional players.

Dubbed as “Digital Asset Receipts (DARs)”, the product gives investors the exposure to crypto market without actually holding the digital currency. There will be a custodian holding the digital assets on behalf of the customer.

Once the receipt gets issued, Citigroup will notify the Wall Street firm Depository Trust & Clearing Corp, for further for clearing and settlement. This way Citigroup plans to give legitimacy to investor’s digital asset purchases and track them when required. Citigroup believes that DAR will offer retail investors a less-risky alternative over other products to invest in the cryptocurrency market.

The Digital Asset Receipts (DARs) is jointly developed by Citigroup’s capital markets origination team and the depository receipts services team. DAR works just like the American Depository Receipt (ADR) which allows U.S. investors to trade foreign stocks that do not trade on the domestic exchanges.

Citigroup is currently one of the biggest issuers of ADRs in the world, and looks to replicate the same success story in the crypto market as well! To be noted, an official announcement from Citigroup is yet to come. Also, there is no timeline set by Citigroup for the launch of the crypto-investment product. According to the Business Insider report, the company is currently talking to several potential partners.

It will be interesting to see SEC’s reaction to this after its hard-hitting stand on the exchange-traded-funds in the last few months. The regulatory watchdog has remained averse to approving crypto-investment products citing high volatility and risks associated with cryptocurrency investments.

Over the last one month, SEC has rejected multiple Bitcoin ETF proposals filed by Gemini, ProShares, Direxion and GraniteShares. The SEC has delayed another important Bitcoin ETF proposal by CBOE exchange, to this month-end. Many analysts have previously said that there are fewer chances of SEC approving Bitcoin ETF before 2019.

In addition to Citigroup, another Wall Street giant - Goldman Sachs - is also working on cryptocurrency-related investment products. Speaking at the TechCrunch Disrupt Conference in San Francisco last week, Goldman Sachs CEO Martin Chavez said that they are working on a Bitcoin derivative product.

Chavez said: "The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they're settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges.”