Former Citigroup executive plans to issue Bitcoin exchange-traded products without SEC approval

While everyone is still scratching their heads over when the U.S. Securities and Exchange Commission (SEC) will approve a Bitcoin spot exchange-traded fund (ETF), a group of former Citigroup executives is planning to issue Bitcoin depositary receipts to qualified institutional investors. This product does not need to be registered under the Securities Act of 1933, meaning it can be issued without SEC approval, allowing investors to directly hold Bitcoin.

What are ADR American Depositary Receipts?

ADR stands for American Depositary Receipts, which are certificates representing shares of a foreign company that are listed on a U.S. stock exchange. One of the most well-known examples is Taiwan Semiconductor Manufacturing Company (TSMC) ADR, which was issued to the U.S. market in 1997 with the stock code TSM. TSMC took a portion of its shares issued in Taiwan, packaged them as ADRs, making it easier for U.S. investors to buy shares of Taiwanese companies and also helping Taiwanese companies increase their visibility and raise funds in the U.S. market.

ADR Analysis: Ark continues to be bullish on the AI industry, buying Taiwan's national treasure TSMC ADR TSM.

Receipts Depositary Corporation, a startup founded by former Citigroup executives

Receipts Depositary Corporation (RDC), a startup founded by several former Citigroup executives, announced plans to issue the first batch of Bitcoin Depositary Receipts (BTC DR) to qualified institutional investors. The BTC DR product allows investors to obtain Bitcoin securities through U.S.-regulated market infrastructure and settle through a custodian trust company, with Anchorage Digital Bank National Association responsible for Bitcoin custody.

RDC has received support from investors such as Franklin Templeton, BTIG, and Broadhaven Ventures.

Bitcoin Depositary Receipts (BTC DR)

According to their press release, RDC plans to issue the first batch of BTC DR to qualified institutional buyers (QIB) in the coming weeks, with these transactions not requiring registration under the 1933 Securities Act. BTC DR follows a structure similar to American Depositary Receipts (ADR). Like ADRs, BTC DR operates within U.S.-regulated market infrastructure and clears through the Depository Trust Company (DTC). The product has been assigned CUSIP and ISIN security numbers.

Ankit Mehta, co-founder and CEO of RDC, stated:

We are excited to offer qualified institutional buyers the secure, regulated digital assets they have been waiting for through BTC DR.

He added that direct purchase of Bitcoin is not the preferred option for some regulated entities due to challenges in the crypto market such as security risks and regulatory uncertainty. Some of these challenges are similar to those faced when Americans invest in foreign companies, and American Depositary Receipts help mitigate these challenges.

Comparison of Bitcoin Depositary Receipts and ETFs

RDC's model requires all BTC DR to be 100% backed by custodied Bitcoin and cannot be lent or pledged. BTC DR provides direct ownership of the underlying asset, offering complete fungibility and direct claim to custodied Bitcoin, thereby reducing counterparty credit risk for the issuing custodian. BTC DR leverages existing workflows and the securities ecosystem to provide robust risk management and asset protection.

A comparison of Bitcoin Depositary Receipts, Bitcoin spot ETFs, and directly holding Bitcoin is summarized in the table below: