Multinational Financial Services Giant Citibank Explores Tokenized Securities on the Blockchain
Citibank has announced its experimentation with tokenized securities on the blockchain to drive the adoption of distributed ledger technology in the financial industry. The bank has collaborated with Wellington Management and WisdomTree, a crypto-supportive ETF sponsor, to launch a “proof of concept” for the program. The latest test involved tokenizing a hypothetical Wellington-issued private equity fund on the Avalanche smart contract platform. Citibank has integrated fund distribution rules into the underlying smart contract, determining how tokens are distributed among WisdomTree clients. Additionally, the bank tested using a private fund token as collateral in an automated lending contract with the Depository Trust & Clearing Corporation’s crypto unit.
Advancing Blockchain-Based Securities
Citibank’s exploration of tokenized securities follows its recent involvement in other blockchain initiatives. In October, former Citigroup executives announced plans to issue Bitcoin Depository Receipts (BTC DRs) to global institutional investors. These receipts would provide Bitcoin exposure to clients without requiring registration under the Securities Act of 1933. Additionally, Citibank became the first digital custodian of the BondbloX Bond Exchange in September, leveraging blockchain technology to democratize access to bonds. The market cap of tokenized securities has seen significant growth, reaching $489 million in December. Franklin Templeton CEO Jenny Johnson has described tokenized securities as a game-changer for the financial industry and has expressed growing optimism towards Bitcoin.
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