Category Archives: Citigroup

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Wary Crypto Institutional Investors Could Benefit from Citigroup’s Digital Asset Receipt

Banking giant Citigroup is set to launch a digital asset receipt system to promote cryptocurrencies to institutional investors in another move linking the bank with digital currency.

A report from Business Insider has linked Citigroup with an idea to invest in cryptocurrencies in the form of digital asset receipts.

The digital asset receipt (DAR) is an investment instrument Citigroup has created in order to attract wary investors into crypto asset investing, without actually owning the assets. This relieves the investor of any responsibility of ownership while allowing them to invest safely without risk of being defrauded through cybercrime.

In April, an initial expression of interest was expressed by the group through a report entitled “Bank of the Future: The ABCs of Digital Disruption in Finance”, suggesting in the report that in the future banks will need “senior leadership teams to be focused on digital transformation” for their future well-being.

Although this is rather a broad statement, a contact at the bank has reportedly come forward and suggested that things have moved on since that statement, saying that Citibank “has moved beyond thinking about crypto” and now wants to look at it terms of a consumer product.

It appears that this may be Citigroup’s way into the crypto market as it tests the water. DARs will function much in the way that American Depository Receipts (ADRs) have done. An ADR is a negotiable certificate denoting shares in a foreign stock listed on a US exchange. This model is proposed by Citigroup to facilitate the issuing of the DARs.

A statement from an undisclosed source close to Citigroup explained:

“We expect it would be a security structured so that custody, settlement, etc. would fit into existing systems and regimes versus an NDF which is an OTC derivative. Many investors are often more restricted in their use of derivatives versus purchasing securities.”

Although Citigroup has not confirmed the suggestion that it is considering moving down the crypto road, it has signed up for IBM’s trial blockchain project with USD 5 trillion a day foreign exchange settlement provider CLS.

 

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Citigroup Reportedly Eyeing Crypto Products

It appears that US banking giant Citigroup is looking into crypto products, according to an insider at the bank.

In April, an initial expression of interest was expressed by the group through a report entitled ‘Bank of the Future: The ABCs of Digital Disruption in Finance’, suggesting in the report that in the future banks will need “senior leadership teams to be focused on digital transformation” for their future well-being.

Although this is rather a broad statement, a contact at the bank has reportedly come forward and suggested that things have moved on since that statement, saying that Citibank “has moved beyond thinking about crypto” and now wants to look at it terms of a consumer product.

The current debate, particularly among major Wall Street financial institutions, is whether to take a wholehearted plunge into cryptocurrency and some are now dabbling around the futures market to see how it pans out. This kind of toe-dipping is mainly driven by customer pressure, whilst the banks continue to deal with the world outside which is still driven largely by apprehension and skepticism when it comes to cryptocurrency.

Such concerns reportedly led to Citibank’s Head of Consumer Crypto Asset Innovation title removed from her LinkedIn page for just that guilt by association scenario.

Although Citigroup has not confirmed the suggestion that it is considering moving down the crypto road, it has signed up for IBM’s trial blockchain project with USD 5 trillion a day foreign exchange settlement provider CLS.

There may be a suggestion of a hint in the recent 128-page Citigroup report though. It lists use cases for smart contracts, is also pro-Ripple and suggests that Bitcoin isn’t losing steam but banks may well be under some pressure.

Wednesday’s US Treasury Department statement that cryptocurrencies are “poised to impact innovation in financial services”, may well give some credibility to Citibank’s plans if they turn out to be a credible reflection of the company’s future direction.

 

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Malta Banker Association Chair Says Crypto Will Make Banks Obsolete

Marcel Cassar, chairman of the Malta Bankers Association (MBA), has told The Malta Independent that cryptocurrencies may pose a significant threat to banks, possibly making them obsolete.

He suggested that the threat to banking of mainstream cryptocurrency adoption was because “their traditional role as main payment intermediary for funds and currency transmission will become challenged, if not obsolete”.

It is hardly surprising that such comments would originate from a banker in Malta given its current place in the crypto space. Malta has become increasingly appealing to Bitcoin companies conducting business there due to the island’s positive spin on blockchain technology and its open-minded approach to regulation linked to a strong economy. It also boasts the largest cryptocurrency trading volume in the world, according to Morgan Stanley.

Add to this Prime Minister of Malta Joseph Muscat’s recent plans to re-establish several cryptocurrency businesses in his country’s jurisdiction and it is clear that the country is preparing for a future with cryptocurrency. Malta already has pro-blockchain legislation and existing regulations around cryptocurrency, making this announcement an outreach for more cryptocurrency companies to locate in the Mediterranean country.

Cassar sees these technologies as positive for banking in the sense of blockchain offering unbridled and irrefutable authenticity to transactions and documentation, himself describing the benefits as “undisputed”, but sees any major significant changes by banks as still quite distant.

His comments that banks may well be made obsolete as the new technology really takes hold don’t extend to fiat currency. Some banks, he says, are filling a gap and profiting by just simply limiting their involvement to advice to customers regarding ICOs and custody services.

Independent.com refers to many banks’ current lack in innovation and energy in getting on board with the new tech, pointing to ex-Citigroup boss Walter B Wriston who in 1981 commented:

“The belief that a market is yours by some divine right is an old dream. Companies that fail to change become tombstones in the corporate graveyard.”

 

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