By Michael Scott
Franklin Templeton-supported Receipts Depository Corporation (RDC) intends to give bitcoin-founded depositary receipts in the coming weeks.
Based on the United States Securities Act of 13, the BTC DRs are not part of SEC registration for qualified institutional purchasers.
In the midst of talks concerning the likely sanctioning of a spot Bitcoin ETF in the U.S. by the Securities and Exchange Commission (SEC), Franklin Templeton-supported Receipts Depository Corporation intends to unveil a bitcoin-founded security product exempt from registration with the SEC.
Bitcoin Depositary Receipts Exempt from SEC Registration
Based on the United States Securities Act of 1993, the firm claimed that depositary receipts are exempt for eligible institutional purchasers. It anticipates giving the initial DRs to these kinds of investors in the forthcoming weeks.
Eligible institutional purchasers refer to financially advanced entities, for instance, investment companies and banks, with major assets. This permits them to trade securities not registered with the Securities and Exchange Commission.
RDC, which Broadhaven Ventures and BTIG also support, also said that the Bitcoin DRs’ construction is similar to the American Depositary Receipts, which embody shares of foreign stocks given by banks. Further, SDRs are traded on United States stock exchanges in United States dollars, enabling American investors to purchase and sell foreign firms’ shares.
Ankit Mehta, RDC’s chief executive officer and co-founder, said they are happy to offer eligible institutional purchasers safe and controlled access to digital assets they have been anticipating through BTC DRs.
The executive also noted that using depository receipts has some benefits, for instance, offering direct ownership of the underlying asset, their tried and real framework, and seamless incorporation into institutional products. BTC DRs are generally fungible since QIBs can change their Bitcoin holdings into DRs and vice versa.
BTC DRs’ Functioning
Broadridge Corporate Issuer Solutions serves as RDC’s Securities and Exchange Commission-registered agent. Additionally, Anchorage Digital, the federally chartered digital asset bank, will offer custody in an insolvency remote framework, alleviating counterparty credit risk from the issuing depositary.
According to the firm, this model ensures full backing of the DRs by Bitcoin held in custody. Besides, it eliminates the possibility of lending, pledging, or re-hypothecating.
The BTC DRs run within the United States-controlled market infrastructure, and their clearance happens through The Depository Trust Company. This enables eligible investors to possess Bitcoin using this technology. Additionally, it ensures workflows and counterparty links are utilized for traditional securities.
Diogo Monica, Anchorage Digital co-founder and president, said the RDC team possesses some of the most robust talent available in the highly technical sphere of depository receipts. The underlying Bitcoin is securely kept through institutional-grade custody. As such, they are eager to aid in bringing Bitcoin to the securities system.
Despite BTC DRs being RDC’s initial offering, the firm also revealed its ability to develop clearinghouse-qualified securities for optional assets.
Reflection on the Race for Spot Bitcoin Exchange-Traded Fund (ETF)
The crypto sector has been vying for a spot in Bitcoin exchange-traded funds for years. In September, Frank Templeton joined the race and is finally one of the 14 asset managers seeking approval from the Securities and Exchange Commission.
The Franklin Bitcoin exchange-traded find, the assets would comprise mainly Bitcoin held by Coinbase Custody Trust Company. If sanctioned, the listing and trading of shares will happen on the Cboe BZX Exchange.
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