Citigroup planning crypto trading by issuing receipts

[NEW YORK] Citigroup Inc has developed a new mechanism for investing in cryptocurrencies such as bitcoin, according to a person with knowledge of the plans.

The bank plans to act as an agent issuing so-called digital asset receipts, or DARs, to enable trading by proxy without direct ownership of the underlying coins, said the person, who asked not to be identified because the information isn't public. By falling within existing regulatory regimes, the structure could give investors a relatively safe method of trading in crypto.

A representative for the New York-based bank declined to comment on the plans, which were reported earlier on Sunday by Business Insider.

The DARs would function similarly to American depositary receipts, or ADRs, which are sometimes used to trade baskets of non-US stocks, according to the person. The cryptocurrencies would be held by a separate custodian.

It's unclear how US regulators would view DARs. The Securities and Exchange Commission has taken a cautious approach towards virtual currency-linked securities, shooting down several proposals for crypto-themed exchange-traded funds. On Sunday, the SEC temporarily suspended trading in two crypto-linked exchange-traded notes, citing investor confusion regarding the assets.

Concern that the pace of crypto adoption is slowing has weighed on virtual currency markets. After soaring 15-fold in 2017, bitcoin has lost more than half its value this year. Declines over the weekend reduced the market capitalisation of digital assets tracked by CoinMarketCap.com to US$196 billion, down about US$640 billion from its January peak.

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