Citigroup’s Digital Asset Receipt Could Encourage Institutional Investors to Jump Into Bitcoin
Financial giant Citigroup is reportedly preparing to launch a digital asset receipt system that would allow institutional investors to securely invest in cryptocurrencies.
According to a report from Business Insider, Citigroup is creating a custody-type service that would make it easier for financial institutions to get involved with crypto. The launch of such a system could encourage wary crypto investors to get involved. Investors who have previously avoided crypto due to security concerns could get involved in a safe way, backed by the word of a major financial institution.
The digital asset receipt (DAR) is an investment instrument created by Citigroup to attract wary investors into crypto asset investing without actually owning the assets. Investors are relieved of any responsibility in terms of storing or securing the cryptoassets, allowing them to invest safely without worrying about having their tokens hacked or compromised.
We first saw a hint of Citigroup getting involved with crypto back in April, when the financial giant published a report called, “Bank of the Future: The ABCs of Digital Disruption in Finance.”
That report suggested that future banks will need senior leadership teams that are “focused on digital transformation” if they want to continue competing moving forward.
Obviously, that’s a vague statement with no direct implications of crypto involvement. However, the purported launch of digital asset receipts would have a huge impact on Citigroup and the crypto industry.
How Would Digital Asset Receipts Work?
Citigroup may be testing the waters of the crypto market with its digital asset receipts. These receipts appear to function in a similar way to American Depository Receipts (ADRs), which allow American financial institutions to purchase foreign stocks without directly buying that stock.
An ADR is a negotiable certificate that denotes shares of a foreign stock listed on a US exchange. Citigroup’s digital asset receipt reportedly functions in a similar way.
Here’s how Business Insider’s source at Citigroup describes the digital asset receipt:
“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.”
Citigroup, meanwhile, has been completely quiet about these rumors, and the company has not publicly verified its involvement in crypto in any way whatsoever. This digital asset receipt system could never be launched to the public. Or, it could be the investment platform that allows institutional investors to jump into crypto in a major way.
This isn’t the first time Citigroup has been linked to blockchain technology. The bank signed up for IBM’s trial blockchain project with foreign exchange settlement provider, CLS, which processes $5 trillion USD per day.
Could Citigroup become one of the biggest financial institutions in America to embrace crypto? If rumors of Citigroup’s digital asset receipt (DAR) system are to be believed, then the company could create a platform that attracts major institutions to crypto. That could be a gamechanger in a crypto bear market that sorely needs some good news.