Former Citi Executives Launch Bitcoin Securities Startup

Former Citi Executives Launch Bitcoin Securities Startup

Time Stamp: January 4, 2024 12:48 PM
Source Node: 2430474

Innovation | Release | Jan 4, 2024

A team of ex-Citigroup executives has unveiled a startup, Receipts Depositary Corp. (RDC), offering Bitcoin-backed securities, uniquely structured to bypass U.S. SEC approval requirements.

Receipts Depositary Corp. (RDC), founded by former Citigroup executives, has introduced an innovative financial product in the cryptocurrency space: Bitcoin-backed securities known as Bitcoin Depositary Receipts (BTC DRs). These securities are unique in their structure and regulatory approach, particularly in how they bypass the need for approval from the U.S. Securities and Exchange Commission (SEC).

RDC’s Bitcoin Depositary Receipts (BTC DRs)

RDC has announced the launch of the first-ever Bitcoin depositary receipt, specifically targeting Qualified Institutional Buyers (QIBs). The issuance of these BTC DRs is expected to begin in the coming weeks.

BTC DRs are structured similarly to American Depositary Receipts (ADRs) and operate within the U.S.-regulated market infrastructure. They are cleared through The Depository Trust Company (DTC) and have been assigned a CUSIP number and an ISIN, integrating them into the established financial system.

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The BTC DRs will be securely held in a bankruptcy remote structure, with Anchorage Digital Bank National Association, a federally chartered digital asset bank, providing custody. This ensures that the Bitcoin represented by the BTC DRs is secure and cannot be lent, re-hypothecated, or pledged.

The company is positioned to create clearinghouse-eligible securities for other alternative assets as well, indicating a broader application of their model beyond Bitcoin.

Why It Bypasses the Need for SEC Approval

RDC’s BTC DRs are offered in transactions that are exempt from registration under the Securities Act of 1933. This particular act governs the offer and sale of securities in the United States. By structuring the BTC DRs in a way that qualifies for an exemption, RDC avoids the lengthy and uncertain process of SEC approval.

The BTC DRs are tailored for institutional investors, a group that typically has more resources and expertise to conduct due diligence and understand the risks associated with such investments. This focus on a more sophisticated investor base aligns with certain exemptions in securities law meant to protect general retail investors.

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Unlike traditional ETFs, which are often subject to SEC approval due to their structure and the need to protect retail investors, RDC’s BTC DRs offer direct ownership of Bitcoin. This direct ownership model differs significantly from the derivative nature of many financial products under SEC scrutiny.

Why It’s Important

By offering a product that appeals to institutional investors and aligns with existing regulatory frameworks, RDC is potentially paving the way for broader acceptance and integration of cryptocurrencies into mainstream finance. This approach could serve as a model for other companies looking to offer digital asset products in a regulatory-compliant manner, contributing to the maturation and stabilization of the cryptocurrency market.

NCFA Jan 2018 resize - Former Citi Executives Launch Bitcoin Securities Startup

NCFA Jan 2018 resize - Former Citi Executives Launch Bitcoin Securities StartupThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada’s Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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