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Depositary Receipts: A Critical Direct Bridge Between Crypto and TradFi

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Digital assets have grown into a multi-trillion-dollar market, yet they remain largely disconnected from traditional finance. Institutional investors increasingly want to own and monetize digital assets, but most banks, broker-dealers and asset managers operate on infrastructure designed for stocks and bonds — not blockchain-based assets. While spot crypto ETFs are an important step toward integration, they only enable passive exposure to the asset class. For digital assets to fully mature, they need a mechanism that bridges them with the entirety of the existing capital markets infrastructure in a familiar, regulated way.

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Enter American Depositary Receipts (ADRs). For nearly a century, receipts have served as that bridge for international stocks, debt and commodities, enabling U.S. investors to own foreign assets with the same ease as domestic securities. The first ADR—issued in 1927—set the stage for a system that today facilitates trillions in global investment. ADRs work because they provide fungibility, economic and governance rights and U.S. regulatory oversight, all while ensuring efficient settlement through the Depository Trust & Clearing Corporation (DTCC). They enhance local liquidity and market access, as seen in Chinese companies listing on the London Stock Exchange and U.S. stocks trading in Brazil.

Crypto as the modern foreign market

Crypto-focused ADRs will play a similar role for digital assets. Just like foreign markets, crypto operates outside the traditional U.S. capital markets, making it difficult for most institutions to engage without specialized infrastructure. ADRs provide a regulated, accessible and familiar framework that enables:

Seamless access – Crypto can be included in funds and held at existing banks and brokerage accounts, unlocking traditional capital markets utility.

Efficient two-way convertibility – By not being limited to authorized intermediaries, ADRs provide asset owners the choice to convert underlying crypto and ADRs in-kind.

Cost efficiency – ADR conversions are simple, same-day processes that do not require a NAV calculation. Fees are never deducted by selling the underlying crypto.

Institutional workflow compatibility – Settlement through DTCC via unique identifiers like CUSIP and ISIN ensure seamless alignment with existing workflows.

TradFi demands crypto

Institutional demand for digital assets is surging, but most traditional market participants are still tied to DTCC rails and are not set up to directly interact with crypto. ADRs meet these firms where they are today, while also addressing key regulatory, compliance and operational hurdles:

Regulation – ADRs are SEC-regulated securities with CUSIPs, ISINs and tickers, ensuring investor protection.

Compliance – Only regulated entities (broker-dealers, banks, etc.) custody and service ADRs, maintaining high compliance standards.

Operations – ADRs settle through traditional stock clearing systems, just like any other security.

Unlocking market expansion

By linking the $3 trillion crypto market with the $87 trillion securities market in DTCC, ADRs can drive institutional adoption and unlock new opportunities in the traditional markets, including the following:

24/7 trading – Crypto markets never close, but traditional securities do. ADRs enable round-the-clock trading of traditional securities, mitigating overnight and weekend risk. Since the launch of spot bitcoin ETFs in early 2024, BTC has experienced 10% swings on two separate weekends —moves that institutional investors could not fully capitalize on.

Yield, lending & settlement – ADRs could be used for margin trading, settlement of spot crypto and futures trading, collateralized lending and structured products. Due to their unique ability to link ADR and spot crypto liquidity, ADRs are an ideal instrument to institutionalize these use cases.

Custody choice – Investors can conveniently hold assets on-chain or in traditional brokerage accounts.

Fund inclusion – Due to their security status, ADRs enable crypto ownership in ETFs and institutional portfolios.

Conclusion: a foundation for institutional growth

ADRs revolutionized global investing by making foreign stocks seamlessly available to U.S. investors. Now, there is a unique opportunity to continue this legacy of enabling market access. By providing a regulated, efficient and familiar bridge for institutions to engage with digital assets, ADRs could be the key to unlocking crypto’s next stage of growth and ultimately bring new institutional capital on-chain.

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Fed Joins OCC, FDIC in Withdrawing Crypto Warnings for U.S. Banks

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The Federal Reserve has joined its fellow U.S. banking regulators in deleting its crypto guidance of previous years, including notices that banks should get pre-approvals before they get involved in crypto activity.

Now, all three agencies — including the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. — have joined in reversing those previous policies, leaving crypto matters at banks in the hands of their managers and compliance executives. In the absence of guidance, the banking industry awaits new laws from Congress to define how the digital assets industry should operate in the U.S.

«These actions ensure the Board’s expectations remain aligned with evolving risks and further support innovation in the banking system,» the Fed said in the Thursday statement announcing the change.

Banking supervision of its state member banks is one of the multiple roles performed by the Fed, which is better known for its monetary policy work. The agency’s move on Thursday will specifically remove four pieces of crypto guidance the board signed onto in 2022 and 2023, highlighting risks to banks posed by the sector.

Fed officials «will instead monitor banks’ crypto-asset activities through the normal supervisory process.»

Read More: FDIC Reverses U.S. Crypto Banking Policy That Demanded Prior Approvals

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Global Tokenized Real Estate Market Could Explode to $4T by 2035, Deloitte Forecasts

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Real estate tokenization—once a niche experiment—may soon become a core pillar of how property is financed, owned and traded, according to a Thursday report by Deloitte Center for Financial Services.

The market of tokenized real estate could reach $4 trillion by 2035, growing at a compound annual rate of 27% from the current size of under $300 billion, the firm forecasted.

Tokenized real estate market growth projection (Deloitte)

Tokenization of real-world assets (RWA) is a red-hot sector at the intersection of crypto tech and traditional finance. It consists of creating digital versions of assets like bonds, funds and real estate, that represent ownerships on blockchain rails.
The process offers operational efficiencies, cheaper and faster settlements and broader investor access.

For the real estate sector, tokenization’s appeal lies in its ability to automate and simplify complex financial agreements, the report explained, such as launching a real estate fund on-chain with coded rules handling ownership transfers and capital flows. An example for this is Kin Capital’s $100 million real estate debt fund tokenization platform Chintai with trust-deed-based lending, Deloitte noted.

The report outlines a three-pronged evolution of tokenized property: private real estate funds, securitized loan ownership, and under-construction or undeveloped land projects. Of these, tokenized debt securities are expected to dominate, hitting $2.39 trillion in value by 2035, based on the report’s forecast. Private funds could contribute around $1 trillion, while land development assets may account for some $500 billion.

(Deloitte)

Despite the advantages, challenges remain, the report noted, especially around regulation, asset custody, cybersecurity and default scenarios.

Read more: Tokenized Funds’ Rapid Growth Comes With Red Flags: Moody’s

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El Salvador’s Top Crypto Regulator Meets With U.S. SEC: ‘It Was Very Refreshing’

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El Salvador’s Comisión Nacional de Activos Digitales (CNAD), the agency in charge of regulating digital assets in the Central American nation, is seeking to establish a cross-border regulatory sandbox with the U.S. Securities and Exchange Commission (SEC).

“We want to create international collaboration,” Juan Carlos Reyes, president of the CNAD, told CoinDesk in an interview. “Our biggest message is that digital assets don’t have any geographical barriers. Collaboration with regulators should not have international barriers either.”

El Salvador is in a unique situation in that it did not boast of strong financial institutions, or even of an existing ecosystem of developers, when President Nayib Bukele made bitcoin legal tender in 2021. That means the CNAD was able to start with a blank slate when it introduced a regulatory framework tailored to crypto.

Almost two years later after Reyes took over the agency, El Salvador’s advanced regulatory framework has incentivized crypto giants such as Tether, Bitfinex and Binance to open shop in the country.

The idea, Reyes said, is for the U.S. SEC to now use El Salvador as a live, real-world case study to evaluate streamlined regulatory approaches for digital assets — in other words, for the SEC to learn from El Salvador’s experience as it revamps its own regulatory framework in a post-Gensler world.

The pilot program proposed by the CNAD involves different scenarios: a U.S.-licensed traditional finance broker obtaining a digital asset license under CNAD regulations, and the development of two small-scale tokenization offerings facilitated by a CNAD-licensed tokenization company. Each scenario would be capped at $10,000.

These initiatives would support some of the objectives laid out by SEC Commissioner Hester Peirce in February, when she wrote that the SEC Crypto Task Force, which she now leads, would take a very different approach towards crypto regulation from here on out.

“CNAD really looked at [Pierce’s document] with a critical eye as to how we can help,” Erica Perkin, owner of The Perkin Law Firm and a member of CNAD’s advisory group, told CoinDesk. “We’re here. There’s data [the SEC] might want to collect. It’s difficult to collect in the U.S. … We’ve built a framework that’s nimble enough to work on the exact issues that the SEC is looking at, and we’re here to help and collect information on how we can best do that.”

The CNAD met with the SEC’s Crypto Task Force on April 22 to discuss the initiative. The meeting was constructive, according to Reyes and Perkin. “They asked good questions,” Perkin said. “They’re in an information-gathering phase. They were engaged and open to discussion.”

Reyes has already signed regulatory cooperation agreements with countries such as Argentina and Paraguay. In his view, the SEC seems to be ahead of the curve when it comes to understanding the regulatory needs of digital assets, whereas regulators in other jurisdictions have tended to see crypto regulation from a traditional finance perspective.

“The quality of people that make up the SEC Crypto Task Force is quite impressive. They get it. They understand the technology,” Reyes said. “We were able to have discussions that were on point about what’s needed in order to regulate the technology… It was very refreshing.”

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