Ex-Citi Bank Executives Launch Startup To Offer Bitcoin Securities That Don't Need US SEC Regulatory Approval
9 January 2024
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Former executives from Citigroup have created a new company, Receipts Depositary Corp. (RDC).
They're introducing a new way for big investors, like banks or pension funds, to invest in Bitcoin.
This method is similar to how U.S. investors buy stocks from foreign countries.
Usually, when you invest in foreign stocks, you use American depositary receipts (ADRs), which represent those stocks in U.S. markets.
RDC's idea, called Bitcoin Depositary Receipts (BTC DRs), works the same way but for Bitcoin.
The big deal here is that RDC's BTC DRs don't need approval from the U.S. Securities and Exchange Commission (SEC).
The SEC is like a financial police officer; they make sure investments are safe and legal.
But RDC found a way to offer BTC DRs without needing the SEC's green light.
They're using rules from an old law, the Securities Act of 1933, which lets them avoid some usual requirements.
Normally, investing in Bitcoin for these big investors is tricky.
They often use something called a spot exchange-traded fund (ETF).
An ETF is like a basket of investments you can buy or sell.
But for Bitcoin, the SEC hasn't approved any ETFs yet.
RDC's BTC DRs offer a new choice. Instead of getting cash back like in a Bitcoin ETF, investors will own actual Bitcoin.
Ankit Mehta, who helped start RDC, says depositary receipts are great because they've been used for a long time, give investors real Bitcoin, and fit easily into big investment plans.
This is timely because the SEC might soon allow a Bitcoin ETF.
RDC is working with Anchorage Digital Bank National Association to keep the managed Bitcoin safe.
This partnership ensures that the Bitcoin is handled securely and according to regulations. Read more here.
How Could Zucoin And Splitchain Revolutionize Investment Strategies?
The innovative approach by Receipts Depositary Corp. (RDC) to enable big investors to engage in Bitcoin investment without the need for US SEC approval heralds a significant shift in the cryptocurrency investment landscape.
This strategy, through the use of Bitcoin Depositary Receipts (BTC DRs), not only reduces regulatory hurdles but also presents a new paradigm in how institutional investors can participate in the cryptocurrency market.
This development holds particular relevance for Zucoin and Splitchain, offering insights into how third parties using the Splitchain network could enhance their strategies and systems in this fast-evolving ecosystem.
The key lies in understanding and adapting to the framework established by RDC.
By integrating a similar mechanism, third parties that use Zucoin could then attract large-scale investors, including banks and pension funds, which have traditionally been hesitant due to regulatory uncertainties.
Offering something like Zucoin Depositary Receipts (ZDRs), mirroring the BTC DRs concept, would allow these investors to indirectly invest in Zucoin while minimizing additional complexities.
This method would not only expand Zucoin's investor base but also increase its liquidity and market presence.
Splitchain technology, a cornerstone of Zucoin's architecture, plays a crucial role here.
By leveraging Splitchain, these ZDRs could be managed more efficiently and securely.
Splitchain's ability to split a ledger into multiple small pieces enhances transaction settlement speeds to just 90 seconds, while improving safety when with paired its two-factor authentication process.
Trust is a crucial factor for institutional investors concerned about the agility and safety of their investments.
Splitchain's abilities mean that Zucoin can handle large volumes of ZDR transactions without compromising on performance or safety, a significant advantage over traditional cryptocurrencies.
In a world where traditional and digital finance are increasingly intersecting, an embrace of a depositary receipt-like mechanism on top of a ledger network like Splitchain could be very innovative.
As legendary economist John Maynard Keynes famously said, "The difficulty lies not so much in developing new ideas as in escaping from old ones."
Such an approach could further separate Zucoin from conventional cryptocurrency models, gearing it towards a future where it becomes a staple in the portfolios of major institutional investors.
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All the best,
—Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.