A group of former Citigroup Inc. executives, along with Franklin Templeton, BTIG, and Broadhaven Ventures, are set to offer securities backed by Bitcoin that they claim do not require approval from U.S. regulators.
As the debate and anticipation surrounding the approval or denial of spot Bitcoin ETFs intensify, the executives’ efforts look at an alternative approach to providing exposure to BTC.
Bitcoin Depositary Receipts to Offer Access to Bitcoin Securities
The new product, Bitcoin depositary receipts (BTC DRs), functions similarly to American depositary receipts, representing foreign stocks.
The innovation comes from Receipts Depositary Corporation (RDC), planning to issue the initial Bitcoin depositary receipts to qualified global institutional investors via transactions exempt from Securities Act of 1933 registration requirements.
RDC’s BTC DRs aim to offer institutional access to Bitcoin securities within the U.S. regulated market infrastructure and clearance through the Depository Trust Co., facilitating direct ownership in the U.S. clearance process.
Ankit Mehta, RDC’s co-founder and CEO, formerly of Citigroup, emphasized the platform’s role as a conversion tool for hedge funds, family offices, corporations, and large institutional investors, enabling the conversion of Bitcoin into DTC-eligible security.
The operational infrastructure involves Broadridge Corporate Issuer Solutions serving as the transfer agent and Anchorage Digital Bank National Association handling custody of the underlying Bitcoin.
Supported by investors like Franklin Templeton, BTIG, and Broadhaven Ventures, RDC positions its offering as complementary to potential Bitcoin ETFs, expecting approval from the U.S. Securities and Exchange Commission.
Mehta and co-founders Bryant Kim and Ishaan Narain formerly worked within Citi’s depositary-receipt team, indicating their familiarity with this financial framework before establishing RDC.
This development arrives as Bitcoin surpassed $45,000 for the first time in nearly two years, driven by growing optimism regarding the SEC’s potential approval of direct-investment Bitcoin ETFs.
Bitcoin ETFs Approval
Bitcoin depositary receipts provide qualified institutions with direct ownership of Bitcoin, distinct from BTC ETFs redeemed for cash. Meanwhile, spot Bitcoin ETF approvals have been a focal point in the cryptocurrency market, gaining substantial attention as the new year’s trading activities ramp up.
According to Bloomberg ETF analyst Eric Balchunas, if a spot Bitcoin ETF is rejected this month, it’s more likely due to the Securities and Exchange Commission seeking additional time rather than an outright denial.
While the probability of approval might be slim, the SEC’s decision might be geared towards further evaluation rather than a definitive dismissal of the concept.