Citigroup May Be Preparing a New Crypto Investment VehicleSep 10, 2018, 7:49PM
Citigroup may be preparing a new crypto investment vehicle called "Digital Asset Receipts", which permit indirect ownership of cryptocurrencies.
News has emerged that Citigroup, the multinational investment bank, is developing a new custodial service for investment in cryptocurrencies. The rumour stems from an insider who has knowledge of the plans.
The mechanism, called Digital Assets Receipts, will allow Citigroup to offer investors the ability to trade cryptocurrencies like Bitcoin without directly owning any. It would be functionally similar to American Depository Receipts, which are certificates that correlate to a number of shares in a non-US company that is deposited in an overseas bank.
This procedure would fall within the existing regulatory framework, which gives Citigroup the potential to make inroads at an institutional level. The SEC has not approached cryptocurrencies with any leniency of late, recently suspending two cryptocurrency related exchange investment vehicles by Swedish company XBT Provider AB. The board cited “confusion among market participants” as a primary reason, explaining that such confusion could harm investors.
Citigroup may be establishing a novel approach to crypto trading, but Citi analyst Josh Levin cautions against too much wishful thinking with respect to the new opportunities. As reported by TheStreet, Levin wrote to clients saying that,
Our broad conclusion based on the empirical evidence to date is that investors should keep an open mind but treat more heated near-term crypto/blockchain predictions with a healthy skepticism.
Institutional Investment on Its Way?
Citigroup is one of America’s Big Four Banks, and one of the most influential financial institutions in the world. Should this rumor be true, it would should that established financial institutions are actively interested in digital assets despite the bearish sentiment that has grown in the past few months.
Goldman Sachs and JPMorgan are also preparing to get deeper into cryptocurrency, even if minimally at this point, and have put extensive research into the technology. Recent news of Goldman postponing its trading desk, which rattled the market, proved to be false. Despite the bear market, these financial giants are still very much interested in blockchain and cryptocurrency. Ex-hedge fund manager Mike Novogratz has said that institutional investment is key to the market’s expansion, and will precipitate a great surge in price. Others, such as Andreas Antonopoulos believe the sale of futures-like funds such as this one proposed by Citibank will be detrimental to the core crypto community.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.