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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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