Citigroup Hard at Work Finding a New Way to Invest in Cryptocurrencies

A new way to invest in cryptocurrencies? Citigroup has come up with a possible way. Similar to an ADR (American Depository Receipt) which is traded as a note backed by a foreign company's shares, Citigroup envisions a DAR (Digital Asset Receipt) backed by cryptocurrencies. Will it launch? Will the regulators (SEC) balk at the innovation (again)? Take a read at the whole article and.....GO CITIGROUP.

(Bill Taylor/Fintek Capital)

"After a string of bad news around financial products and institutional support for cryptocurrencies, there’s finally some good news: a new financial product reportedly being designed by Citigroup Inc. that allows people to invest in cryptocurrencies without owning them.

According to Business Insider but not yet officially announced, Citi has developed a “digital asset receipt” that operates in a similar way to an American depositary receipt.

An ADR is a negotiable certificate of title to a number of shares in a non-U.S. company that are deposited in an overseas bank, giving investors a way to invest in an overseas company without directly holding shares. A DAR would work in the same way in that the investors would be able to invest in a DAR that holds, via a custodian, a given amount of cryptocurrency.

In terms of trading, DAR investments would be tracked by the Depository Trust & Clearing Corp., the Wall Street clearing and settlement services firm, adding what the report claims is an “important layer of legitimacy and gives investors a way to track the investment within a system that they’re already familiar with.”

The key here is opening up a way for institutional investors and hedge funds to invest in cryptocurrencies in a regulated way using an investment method they are already familiar with.

The idea would be a positive step forward for the legitimacy of cryptocurrencies as an asset class, but it still has to gain regulatory approval and history hasn’t always been kind to other companies that have attempted to bring to market products linked to cryptocurrencies...."