Citigroup’s game changer for the Crypto-world looks to increase Bitcoin Trading
With Goldman Sachs (temporarily) dropping plans of establishing a trading desk devoted to cryptocurrency, another investment bank has decided to venture into the digital currency field. Citigroup is planning to build a Bitcoin trading product and introduce it in the market soon. This pertinent information has been disseminated by some sources inside Citigroup. A ‘creative’ strategy is being employed by the officials at the bank to produce a tradeable Bitcoin asset.
A Digital Asset Receipt (DAR) which works along the lines of an American Depository Receipt (ADR) is on course to be developed, according to sources. An ADR is a Global Depository Receipt that allows non-US companies to raise funds and attract American investors via a US exchange. The concept of the ADR is being combined with a physical Bitcoin to pedal to the digital world.
“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.” said the source.
The Non-Deliverable Forward (NDF) is a form of derivate future contract, wherein the parties to the contract settle the difference between the contracted NDF price and the spot price prevailing currently.
Based on this principle, Citigroup intends to make a securitized product and place it in the market, allowing customers to engage in trade using the ADR classification.
Citigroup wants to be the first major bank to trade physical Bitcoin, and in the view of this another source close to the firm said:
“Citi is circulating a plan that will make it the first bank to (nearly) trade physical Bitcoin. The vehicle that is being proposed is a digital ADR with the bank acting as agent. The info is being passed around, internally, as part of an investor presentation of some sort. Very interesting concept” informed the crypto hedge fund."
Bitcoins and other cryptocurrencies are being seen as the investment of choice for high net worth individuals. With the prospects of a cryptocurrency ETF being met with a slew of obstacles, banks, and other financial establishments will be looked at to introduce a unique and innovative product for wealthy clients.
Citigroup is doubling down in the crypto sector by recruiting skillful manpower. According to the LinkedIn job ads posted at the beginning of the year, Citigroup was in search of senior officials (Vice President and Senior Vice President) in order to explore the risks of cryptocurrency trading, money laundering using bitcoin and other payment technologies.
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