Bitcoin ETF alternative: U.S. to issue Bitcoin Depositary Receipts
Bitcoin ETF alternative: U.S. to issue Bitcoin Depositary Receipts
Amid difficulties in approving applications for spot Bitcoin ETFs, it has become known that Citigroup is ready to introduce a new product called Bitcoin Depositary Receipts (BDRs).
Ex-Citigroup Inc. executives revealed their plans to issue Bitcoin-based securities that do not require SEC approval. The BDRs will also be backed by Bitcoins. This news has caught the attention of the crypto community around the world, as DRS could become an alternative to spot Bitcoin ETFs.
Bitcoin Depositary Receipts have many similarities to American Depositary Receipts for foreign stocks. The start-up Receipts Depositary Corporation (RDC) has announced its intention to issue initial BDRs to qualified global institutional investors. These securities will not be subject to registration restrictions under the Securities Act of 1933, according to CoinGape.
RDC said in a statement that the securities will allow institutions to access BDRs through a U.S.-regulated market infrastructure, followed by the approval of the Depository Trust Co.
RDC co-founder and former Citigroup executive Ankita Mehta explained that the main objectives of the BDRs are to convert assets for hedge funds, large institutional investors, or private equity firms. By converting their Bitcoin assets into securities, investors will be able to take direct ownership of U.S. securities.
Financial services firm Broadridge Corporate Solutions is prepared to provide transfer agent services in this project, and Anchorage Digital Bank National Association could act as a custodian for the underlying BTCs in the RDC proposal.
The RDC proposal has been backed by investment funds such as Franklin Templeton Investments, BTIG, and Broadhaven Ventures. Amid growing concerns about spot Bitcoin ETFs, RDC's alternative offers certified institutions a lucrative new product with direct ownership of Bitcoins, differentiating it from cash-redeemable ETFs.
At the time of writing, the value of Bitcoin has recovered 1.7% to $42,661.
Notably, its market capitalization has increased by nearly 6% to $849 billion.
See also: Binance adds new privacy tokens to its Monitoring Tag list
