A group of former Citigroup executives are set to launch XRP-backed securities, providing institutions with access to the cryptocurrency through regulated market infrastructure. This move is expected to further increase institutional participation in the XRP market.
Receipts Depositary Corp. (RDC), a start-up founded by a group of former Citigroup executives, is planning to launch ‘XRP-backed securities’ . This move will give institutions access to XRP ( XRP ) securities through U.S. regulated market infrastructure.
Citi Alumni-Led startups are companies founded by Citi employees, often leveraging their professional experience and network to launch innovative ventures.
According to a study, 75% of Citi alumni start their own businesses within five years of leaving the bank.
Notable examples include Paytm's founder Vijay Shekhar Sharma, who started his career at Citi, and Varun Sridhar, co-founder of fintech startup Zipmark, also a former Citi employee.
The company already offers “bitcoin and ether-backed securities” , but this new offering will cater to qualified institutional buyers only via transactions exempt from registration under the Securities Act of 1933. As such, it does not need approval from the Securities and Exchange Commission (SEC). Fox Business reported the news earlier Friday.
XRP-backed securities are a type of financial instrument that utilizes the XRP cryptocurrency as collateral.
These securities allow investors to gain exposure to traditional assets, such as stocks or bonds, while leveraging the benefits of XRP's liquidity and volatility.
The use of XRP as backing provides a unique layer of security and stability for these investments.
In 2020, the first XRP-backed security was launched, marking a significant development in the intersection of cryptocurrency and traditional finance.
In a press release in January 2024, RDC founder and CEO Ankit Mehta stated that using depositary receipts brings many benefits, including their “tried and true structure, providing direct ownership of the underlying asset and easy inclusion in institutional products.” This approach is expected to facilitate the growth of XRP in the institutional market.
Several companies have taken steps to bring XRP to an institutional crowd as the native cryptocurrency of the Ripple network has seen tremendous growth over the past year. Several asset managers and exchange-traded fund (ETF) providers have applied for ETFs tracking the price of XRP . The difference between an ETF and depository receipts is that while shares in a potential XRP ETF would be redeemed for cash, depositary receipts would offer direct ownership of the cryptocurrency.
Ripple is a real-time gross settlement system, currency exchange and remittance network.
It was founded in 2012 by Chris Larsen and Jed McCaleb.
The network uses a consensus protocol called the Ripple Protocol Consensus (RPC) to validate transactions.
Ripple supports 40 different currencies and has partnerships with over 200 financial institutions worldwide.
In 2020, Ripple's XRP coin reached an all-time high market capitalization of $80 billion.
The securities will be cleared by the Depository Trust Company (DTC), similar to RDC’s already existing offerings of bitcoin ( BTC ) and ether ( ETH ) backed securities. This development is expected to further increase institutional participation in the XRP market.
