In a bold move reported by Bloomberg on January 4, former Citigroup executives are set to offer BTC-backed securities without seeking approval from US regulators. 

Receipts Depositary Corporation, a startup founded by former Citigroup executives, plans to offer Bitcoin-backed securities that they say do not require U.S. regulatory approval. The product, called Bitcoin Depositary Receipts, will be similar to American Depositary Receipts that…

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The unconventional initiative involves the creation of a “Receipts Depositary Corporation” (RDC). The planned securities, termed Bitcoin Depositary Receipts, function similarly to American Depositary Receipts representing foreign stocks. 

RDC’s BTC Depositary Receipts Significance

The company asserts that this BTC DR offering will grant institutions access to securities via the US-regulated market infrastructure and will undergo clearing through the Depository Trust Co. Distinguishing itself from a Bitcoin ETF, the depositary receipts will provide direct ownership of BTC to qualified institutions, marking a pioneering effort in the field. 

The move is motivated by the belief that some regulated institutions prefer to refrain from purchasing Bitcoin directly due to challenges in the cryptocurrency markets, including security risks and regulatory uncertainties. The RDC proposal aims to offer a product that complements existing Bitcoin ETFs.

Ankit Mehta, CEO of RDC and a former Citigroup executive, said in a press release:

“There are many benefits to using depositary receipts, such as their tried and true structure, providing direct ownership of the underlying asset […] and easy inclusion in institutional products.” 

This innovative product could gain traction among investors amid the current enthusiasm surrounding BTC investments. Notably, the BTC DR stands out by not requiring approval from the US Securities and Exchange Commission (SEC), presenting a unique offering in the market.

As the SEC continues to deliberate on the challenges and considerations related to a spot Bitcoin ETF, the group’s introduction of this unconventional product offers institutional investors an alternative avenue to enter the cryptocurrency markets amid regulatory uncertainty and risk aversion in traditional financial markets.

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