Receipts Depositary Corp. (RDC), an innovative start-up established by a team of former Citigroup executives, is preparing to launch a new financial product: XRP-backed securities. This initiative is expected to provide institutions with regulated access to cryptocurrencies through U.S. market infrastructure, marking a significant milestone in the blending of traditional finance and digital assets.
The forthcoming offering will feature depositary receipts akin to American depositary receipts (ADRs), which currently represent foreign stocks on U.S. equity exchanges. These new XRP-backed securities aim to bridge the gap between institutional investment and digital currencies, allowing qualified institutional buyers to invest in XRP in a compliant manner.
Notably, transactions involving these depositary receipts will be exempt from registration under the Securities Act of 1933. Therefore, RDC will not require approval from the Securities and Exchange Commission (SEC) to proceed. This regulatory flexibility may accelerate institutional adoption of XRP as a secure investment vehicle.
According to Fox Business, the securities will be cleared by the Depository Trust Company (DTC), paralleling RDC’s existing offerings of bitcoin (BTC) and ether (ETH) backed securities. This established clearing process is crucial for facilitating smooth transactions and ensuring that security ownership is accurately recorded.
In a press release dated January 2024, RDC founder and CEO Ankit Mehta emphasized the advantages of utilizing depositary receipts, stating that this “tried and true structure” provides direct ownership of the underlying asset and facilitates easy integration into institutional products. This aligns with the industry’s broader shift towards offering more accessible options for institutional investors.
The move to introduce XRP-backed securities comes at a time when interest in the cryptocurrency market is surging. Ripple’s native cryptocurrency, XRP, has experienced substantial growth over the past year, prompting multiple asset managers and exchange-traded fund (ETF) providers to file applications for ETFs that track the price of XRP.
It is important to note the difference between an ETF and depositary receipts in this context: while shares in an XRP ETF would typically be redeemed for cash, depositary receipts will provide direct ownership of the cryptocurrency itself. This distinction may appeal to institutions seeking more tangible asset exposure.
As the landscape of digital assets continues to evolve, the launch of XRP-backed securities by Receipts Depositary Corp. represents a pivotal development that may lead to increased institutional engagement within the cryptocurrency space.
