These Citi alumni are planning to launch a Bitcoin "security" bypassing the U.S. SEC?
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These Citi alumni are planning to launch a Bitcoin "security" bypassing the U.S. SEC?
Understanding BTC Depository Receipts in One Article
Navigating Web3 tides with focused insightsAuthor: Jamie Crawley, Coindesk
Translation: Jordan, PANews
As market speculation over the imminent approval or rejection of spot Bitcoin ETFs reaches fever pitch, a group of former Citigroup executives are attempting an alternative path aimed at offering investors more choices.
On the evening of January 4, a company called Receipts Depositary Corporation (RDC) emerged, with three co-founders—Ankit Mehta, Bryant Kim, and Ishaan Narain—all formerly part of Citigroup’s depositary receipt team. Their deep familiarity with the depositary receipt financial framework has earned them backing from institutions such as Franklin Templeton, BTIG, and Broadhaven Ventures.
What Are American Depositary Receipts? What Are Bitcoin Depositary Receipts?
According to RDC, the company will offer Bitcoin depositary receipts similar to American depositary receipts (ADRs), and these will not require approval from the U.S. Securities and Exchange Commission (SEC).
So first, what exactly are American depositary receipts?
Depositary receipts (DRs) are securities issued by a depository that represent ownership of underlying assets, helping investors convert, hold, and transfer those assets—such as foreign equities or bonds. Under U.S. securities laws, companies listed in the United States must be incorporated domestically. American depositary receipts are negotiable certificates issued by U.S. commercial banks to facilitate trading of foreign securities in the U.S., typically representing publicly traded stocks or bonds of non-U.S. companies. ADRs trade on U.S. markets just like ordinary U.S. stocks, are issued by U.S. banks, and each certificate represents a certain number of shares of a foreign company held by a custodian abroad. They can be freely traded on U.S. stock exchanges or over-the-counter markets, enabling non-U.S. companies to access the U.S. securities market.
Now that we understand ADRs, let's turn to Bitcoin depositary receipts.
Bitcoin depositary receipts are essentially investment vehicles for Bitcoin, fully interchangeable with the underlying Bitcoin held by a designated custodian. The Bitcoin depositary receipts launched by RDC represent direct ownership of the underlying Bitcoin, rather than shares in a fund. Simply put, Bitcoin depositary receipts allow U.S. investors to invest in Bitcoin much like they would in overseas companies, all without conflicting with the Securities Act.
Bitcoin depositary receipts follow the same structure as American depositary receipts. Like ADRs, they operate within U.S.-regulated market infrastructure and are cleared through the Depository Trust Company (DTC). RDC’s current operational infrastructure includes Broadridge Corporate Issuer Solutions and Anchorage Digital Bank National Association—the former acting as transfer agent and the latter responsible for custody of the underlying Bitcoin. Notably, RDC’s Bitcoin depositary receipts have already been assigned a CUSIP number and an ISIN code.
Six Questions to Understand RDC’s Bitcoin Depositary Receipts
1. Does RDC, the issuer of Bitcoin depositary receipts, own the custodied Bitcoin?
No. As a depository, RDC does not own the underlying Bitcoin held in custody under the terms of the Bitcoin depositary receipt facility. The custodied Bitcoin belongs to the holders of the Bitcoin depositary receipts.
2. Do Bitcoin depositary receipts track the value of the underlying asset?
Yes, Bitcoin depositary receipts are fully fungible with the underlying Bitcoin and are designed to track its value.
3. Can the BTC underlying Bitcoin depositary receipts be lent out?
No. The custodied Bitcoin cannot be lent out and must fully back each outstanding Bitcoin depositary receipt at a 1:1 ratio.
4. Is the custodied Bitcoin subject to claims by creditors?
No. The structure of the Bitcoin depositary receipt ensures that the custodied Bitcoin is legally segregated. The underlying Bitcoin is owned by the holders of the Bitcoin depositary receipts.
5. Who can issue and cancel Bitcoin depositary receipts?
Qualified institutional buyers (QIBs) can issue and cancel Bitcoin depositary receipts.
6. What other assets does RDC’s depositary platform support?
RDC’s mission is to extend the traditional depositary receipt structure to digital and alternative assets. While Bitcoin depositary receipts are currently the only product offered, the company is actively exploring additional products based on widely used digital and alternative assets through a comprehensive due diligence process. This process considers institutional investor demand, custodians’ ability to support these assets, broader market needs, and regulatory perspectives on the underlying assets—including Bitcoin.
Conclusion: What Are the Advantages of Applying the Depositary Receipt Concept to Bitcoin?
Depositary receipts can be cleared and settled through the Depository Trust Company (DTC), allowing investors to trade within their traditional clearing systems. Unlike most other access products, depositary receipts provide direct ownership of the underlying asset, with the depository offering high-touch, value-added operational services to holders.
More importantly, this model avoids registration requirements under the U.S. Securities Act, meaning Bitcoin depositary receipt issuers can effectively “bypass” the SEC—at least for now. According to RDC, their Bitcoin depositary receipts are positioned as a complement to spot Bitcoin ETFs. From this perspective, if spot Bitcoin ETFs fail to gain approval, Bitcoin depositary receipts could serve as a viable alternative.
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