In a move that could significantly impact the cryptocurrency market in the United States, Receipts Depositary Corporation (RDC), backed by Franklin Templeton, BTIG, and Broadhaven Ventures, is set to launch a new bitcoin-based security product.
The product, which is exempt from registration with the Securities and Exchange Commission (SEC), is expected to be issued to qualified institutional buyers under the U.S. Securities Act of 1933 in the coming weeks.
RDC’s Innovative Bitcoin Depositary Receipts
RDC’s new offering, Bitcoin Depositary Receipts (BTC DRs), is designed to provide qualified institutional buyers with a regulated and secure way to access digital assets. These buyers, including banks and investment firms with substantial assets, are capable of trading securities not registered with the SEC due to their financial sophistication.
The BTC DRs are modeled after American Depositary Receipts (ADRs), which are used to represent shares of foreign stocks and are traded on U.S. stock exchanges in U.S. dollars. The structure simplifies the process for American investors to buy and sell shares of foreign companies.
Ankit Mehta, co-founder and CEO of RDC, expressed enthusiasm about providing institutional buyers with secure and regulated access to digital assets through BTC DRs. He highlighted the benefits of using depositary receipts, such as their established structure, direct ownership of the underlying asset, and ease of inclusion in institutional products. BTC DRs offer the advantage of being universally fungible, allowing qualified institutional buyers to convert their bitcoin holdings into DRs and vice versa.
Operational mechanics and regulatory compliance of BTC DRs
Broadridge Corporate Issuer Solutions will act as the SEC-registered transfer agent for RDC, while Anchorage Digital, a federally chartered digital asset bank, will provide custody in a bankruptcy-remote structure. The arrangement mitigates counterparty credit risk from the issuing depositary and ensures that the DRs are fully backed by bitcoin held in custody. The BTC DRs will not be lent, re-hypothecated, or pledged.
The BTC DRs will operate within the U.S. regulated market infrastructure and will be cleared via The Depository Trust Company. The setup enables qualified investors to own bitcoin using the same technology, workflows, and counterparty relationships they use for traditional securities. Diogo Mónica, president and co-founder of Anchorage Digital, praised the RDC team’s expertise in depositary receipts and expressed excitement about bringing BTC into the securities ecosystem.
While BTC DRs are RDC’s initial offering, the company has plans to create clearinghouse-eligible securities for other alternative assets. The development is part of a broader trend in the crypto industry, which has been eagerly vying for a spot in Bitcoin ETF for years. Franklin Templeton has also joined the race with its Franklin Bitcoin ETF, which would primarily consist of bitcoin held in custody by Coinbase Custody Trust Company and if approved, be listed and traded on the Cboe BZX Exchange.
Conclusion
RDC’s launch of BTC DRs represents a significant milestone in integrating cryptocurrency with traditional financial securities. The innovative product not only provides qualified institutional buyers with a new avenue to invest in bitcoin but also demonstrates the growing acceptance and integration of digital assets within the regulated financial market. As RDC and other asset managers continue to explore and expand these offerings, the landscape of cryptocurrency investment is poised for further evolution and growth.
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