Summary:
Receipts Depositary Corp. plans to launch XRP-backed securities for institutional investors.
The securities will be exempt from SEC registration, streamlining the approval process.
RDC's offerings include depositary receipts, similar to ADRs for foreign stocks.
Direct ownership of XRP through depositary receipts contrasts with ETF cash redemption.
Receipts Depositary Corp. Expands with XRP-Backed Securities
Receipts Depositary Corp. (RDC), a start-up founded by former Citigroup executives, is making waves in the cryptocurrency world by planning to launch XRP-backed securities. This move is aimed at providing institutions with access to XRP securities through U.S. regulated market infrastructure.
The new offerings will include depositary receipts, akin to American depositary receipts (ADRs) that represent foreign stocks on U.S. equity exchanges. Notably, these securities will be available only to qualified institutional buyers and will be exempt from registration under the Securities Act of 1933, thus bypassing the need for approval from the Securities and Exchange Commission (SEC).
In line with RDC’s existing products, these new XRP securities will be cleared by the Depository Trust Company (DTC), enhancing the credibility and efficiency of the transactions.
Benefits of Depositary Receipts
In a recent press release, RDC founder and CEO Ankit Mehta emphasized the advantages of using depositary receipts, stating they provide a “tried and true structure,” which ensures direct ownership of the underlying asset and facilitates easy inclusion in institutional products.
The push for XRP-backed securities comes as the native cryptocurrency of the Ripple network has experienced substantial growth over the past year. Various asset managers and ETF providers are also seeking to tap into this momentum by applying for ETFs that track the price of XRP.
Key Differences from ETFs
It's essential to note that while an ETF allows shares to be redeemed for cash, depositary receipts will offer direct ownership of the cryptocurrency itself, thus providing a more tangible investment option for institutional players.
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This strategic expansion by RDC underscores the growing interest in cryptocurrency investments among institutional investors, marking a significant step towards greater acceptance and integration of digital assets in traditional finance.
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