Receipts Depository Corp to Launch XRP-Backed Securities for Institutional Investors

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There are enough reasons to assume that institutional interest in the XRP market is growing exponentially. Some research activities of Receipts Depository Corp in the XRP market indicate that the company, which already provides Bitcoin and Ethereum-backed securities, is keen to explore the potential of the third-largest cryptocurrency by market cap as well. 

XRP Securities: A New Avenue for Institutional Investment 

A recent report suggests that Receipts Depository Corp. is planning to launch XRP-backed securities. According to the report, the company will provide depository receipts. 

Those familiar with the concept of RDC’s depository receipts state that these receipts work similar to American Depository Receipts.

What exactly is an ADR? An ADR is like a receipt representing shares of a company. One can buy and sell these receipts on US stock exchanges just like regular US stocks. It is generally used to invent in a company that is based in another country. 

RDC’s XRP Secutries Targeting Qualified Institutional Buyers 

The report notes that RDC will offer its XRP securities exclusively to qualified institutional buyers. 

Experts believe that this targeted approach enables the company to exploit a few critical loopholes in the Securities Act of 1933. 

The act requires most securities to be registered with the SEC before they can be offered to the public. However, an exception exists for offerings made only to ‘qualified institutional buyers’. 

This means that RDC’s XRP securities do not need the approval of the US Securities and Exchange Commission. 

The report states that the company’s XRP securities will be cleared by the Depository Trust Company. Clearing through the DTC makes transactions faster and more efficient. It is a standard practice for many securities offerings, especially those aimed at institutional investors. 

Also Read :   Ripple News: XRP Depository Receipts to Be Offered to Accredited Investors   ,

XRP Depositary Receipts vs. XRP ETFs: What Is Better? 

The RDC’s proposal has come at a time when the cryptocurrency community is discussing the possibilities of XRP ETFs. 

The key question that is bothering the XRP investment community currently is: Are XRP Depositary Receipts better than XRP ETFs? 

What makes XRP Depositary Receipts different is that they represent direct ownership of XRP, whereas ETF shares would be redeemed for cash.

In short, if you own an XRP depositary receipt, you own the XRP it represents. If you own shares in an XRP ETF, you don’t directly own the XRP. You own shares of the ETF, which, in turn, owns XRP.