Banks like Citi adopt blockchain and tokenization in private markets
In collaboration with Wellington and WisdomTree, Citigroup Inc. conducted a simulation regarding the tokenization of private funds in blockchain wagering. This endeavor was designed to demonstrate how a blockchain network can tokenize a private equity fund. Wall Street may embrace distributed ledger technology on a broader scale if the A/B testing proves fruitful.
Chainlink, a decentralized blockchain oracle network provider, formed a partnership with SWIFT, an interbank messaging service, in mid-2023, with the purpose of establishing a connection to Sepolia, a widely recognized Ethereum testnet. This collaboration supported the tokenization testnet.
In less than two months after launching their new Cross-Chain Interoperability Protocol (CCIP), a blockchain communication network similar to Swift, the two businesses successfully transferred tokenized assets between the testnet and other blockchains. Tokenization, the process of integrating blockchain networks with traditional financial assets, was the focus of the experiments.
Citi Bank, a global leader in the financial sector, is presently engaged in collaborative efforts to develop a cash management solution that provides liquidity to corporate clients via an uninterrupted infrastructure that operates round the clock, every day of the year. In a recent interview with their partner, Chainlink, Ryan Rugg, the head of digital assets for Citi’s TTS division, revealed that the bank is in the process of implementing blockchain services and developing strategies to integrate tokenization into the private market.
Rugg was extremely ecstatic that blockchain technology had been recognized as a crucial component in achieving Citi’s objective of customizable currency. Rugg noted that the two current solutions offered by Citi to its clientele are City Token Services for trade transactions and City Token Services for cash transactions.
A variety of digitally enabled treasury, trade, and liquidity management solutions are provided to clients by Citi Treasury and Trade Solutions (TTS). Citi owns and operates the private/permissioned blockchain technology, which enables customers to utilize its services without the need to host a blockchain node.
Citi Treasury and Trade Solutions bolster the solutions portfolio of Citi, which also includes asset servicing, digital currency, collateral mobility, trade, securities, and custody. These solutions furnish clients with an integrated assortment of common technological resources as well as a cohesive strategic methodology. Additionally, TTS is an industry leader in providing bespoke trade finance and cash management solutions, supported by state-of-the-art technological infrastructures and banking authorizations in excess of ninety nations.
By providing investors with private assets in novel digital formats—the result of which will be enhanced compliance and automation—traditional partnerships and Digital Ledger Technology (DLT) will aid additional banks and financial institutions in satisfying complex legal and regulatory requirements. However, banks must ensure that all end-to-end data records, servicing processes, digital identity options, and tokenized cash transactions undergo thorough regulatory and legal compliance assessments prior to final settlement.
