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Citigroup Insider Shares Citi is Working on a Bitcoin ‘Security’ Product, Aims to Be the Leading Company

Citigroup is working in order to launch a new Bitcoin trading product to the market. The main intention is to be ahead of its Tier I banking rivals around the world. The information has been released by some sources inside Citigroup. Apparently, they say that the company is getting legally ‘creative’ in order to offer customers a tradeable, physical Bitcoin asset.

As per the sources, the product that they are going to develop is known as a ‘digital’ American Depository Receipt (ADR), which functions as a foreign security product.

Citigroup is taking the concept of an ADR and moving it to the digital world that is linked to physical Bitcoin.

The source explained on the matter:

“We expect it would be a security structured so that custody, settlement, etc would fit into existing systems and regimes versus an NDF which is an OTC derivative. Many investors are often more restricted in their use of derivatives versus purchasing securities.”

Non-deliverable forward (NDF) are futures contract in which counterparties settle the difference between the contracted NDF price or rate and the prevailing prevailing spot price.

Citigroup wants to create a securitized product and launch it to the market. The main intention is to allow customers to trade it using the ADR designation. According to some experts, this creative solution seems very interesting to enter the crypto market.

According to a crypto hedge fund source, institutions have one main problem: clients know about the cryptocurrency market and want to be part of it. Citigroup is trying to create an innovative concept that could be well received in the market. As the new product uses already accepted infrastructure is very important for regulatory agencies at the time of controlling the space.

Another source close to the bank informed that Citi has a very interesting plan that would make Citigroup the first to trade physical Bitcoin.

“Citi is circulating a plan that will make it the first bank to (nearly) trade physical Bitcoin. The vehicle that is being proposed is a digital ADR with the bank acting as agent. The info is being passed around, internally, as part of an investor presentation of some sort. Very interesting concept,” informed the crypto hedge fund.

This is very important for the market since institutional and wealthy investors are searching for new solutions and products to invest in the cryptocurrency world. One of the many different possibilities is related to a crypto ETF. However, banks and financial institutions could provide very interesting and innovative products to their institutional clients.

Every single institution in Wall Street is trying to understand how to better meet the demand of its institutional clients that are asking for exposure to the cryptocurrency market and to Bitcoin.

Image Courtesy of IBEX Magazine.

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1 COMMENT

  1. Great idea but not innovative. There is already a company that has adapted the ADR model in this way. They are about to launch tokenised equities and bonds, sources from the secondary market. Citi is behind the curve on this one – the company is called CDRX (cdrx.io), started by guys from Goldmans, JP Morgan etc

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