In a bid to grow institutional investments in cryptocurrencies, Citigroup is planning to issue Digital Assets Receipts (DARs). This is according to a report by the Business Insider. The DARs is a financial product that is tailored to enable investors to directly invest in cryptocurrencies without ownership rights.
The Institutional Investors Are Important To The Crypto Market’s Success
Institutional investors have a different impact from individual investors. This is because they have a larger disposable capital to invest, a wider access to expert advisors, and, therefore, tend to be high volume investors. A very important aspect to crypto markets. Hence, with the ongoing market volatility, Citi’s contribution is much needed to cushion the crypto process from a possible freefall.
How The Digital Assets Receipts Work
DARs are functionally modeled like the American Depository Receipts (ADRs). In this case, the ADR is issued by a US Bank in the form of a certificate that is negotiable for denoting the number of assets in a foreign stock exchange on a US-based exchange.
Therefore, the DARs work in the same way where US financial institutions, in this case, the Citigroup issues certificates to traders wishing to take part in non-US based Crypto markets to be traded in exchanges in the United States. The role of the Citigroup will be to ensure that there is security in Crypto trading to avoid losses and other inconveniences that the conventional ADR systems have been able to eliminate. As a first of a kind, the DARs system is a work in progress and the uncertainty of the Crypto coins will be put to test by the system.
The Citigroup Aims To Partner With The Depository Trust & Clearing Corp
The Depository Trust & Clearing Corp is a Wall street middleman service provider that offers leading clearing and settlement services. Therefore, the Citigroup will issue alerts to the middleman for collaborative DARs provision to prospective investors.
The DARs will be a security structure that merges Cryptocurrencies and the mainstream financial markets. Therefore, purchasing securities as digital assets will be possible and investors will be able to benefit from over the counter benefits without having to worry about the looming digital assets’ volatility that is seemingly here to stay.
The SEC Response Remains To Be Seen
The SEC has been having a cautionary approach to Cryptocurrencies due to the risks that they pose such as price fluctuations, security challenges, lack of universal acceptability, etc. In this regard, the SEC may or may not allow the Citigroup to roll out the DARs project. The committee may cite these risks as having a ripple effect on all the financial institutions and therefore putting private investments of the public on the line.
However, there is a perspective that the SEC is softening their hard stances towards Cryptocurrencies following positive speculations that the Bitcoin ETF may be granted with the appointment of a pro-Digital assets Vice president. Therefore, if the DARs authority is granted to the Citigroup, it may be the beginning of a massive crypto mass adoption.