The ability to own cryptocurrencies without actually storing them is an enticing prospect that could bring in a new flock of institutional investors into the crypto markets (despite not owning your private key).
Bitcoin ETFs have looked like the best possible way to provide this opportunity to people, but it is definitely not the only way. Reports have emerged that US multinational investment bank, Citigroup is set to launch a new Bitcoin Trading Product.
This product may perhaps be the best direct way to link institutional investment to cryptocurrency since it will be founded on already existing and regulated principles.
As mentioned above, the proposed Bitcoin trading product will exist in the same model as an American Depository Receipt (ADR). This class of asset defines a negotiable certificate issued by a U.S. bank. It represents a specified number of shares in a foreign stock that may not be traded on US exchanges
Using this concept, Citigroup hopes to launch a crypto Digital Asset Receipt. Citigroup will issue the receipt while the Depository Trust & Clearing Corp will serve as a middleman to settle the fund. Once the group issues a receipt to investors, the middleman is alerted, and this allows the user to track the invested funds.
Using an already existing and regulated infrastructure means that there is little or no reason for such a Bitcoin product to be denied its entrance into the market. It will also add an extra layer of trust and security to cryptocurrencies, thus attracting big Wall Street Investors and even skeptics to the industry.
While these news sound promising, it might ruin the idea of Bitcoin and crypto – being your own bank by holding the private key of your Bitcoin. Citigroup can leverage its rate based on the client’s money invested. This could be very similar to investing in other assets such as gold.
However, while it is still unclear about which stage the Citigroup ADR is in or when it is launching, it definitely has what it takes to bring in institutional investors into the crypto markets. It is an old regulated concept being revamped to suit the new digital world.
Industry participants will try hard not to get their hopes up but will also on the other hand hope that the new product lives up to expectations.