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Citi Launches Token Service in Push For Institutional Crypto Offering

Summary:
The move appears to be a part of a wider push to offer digital assets to institutional clients. The tokens represent a claim against the bank and are processed on a private blockchain owned and managed by Citigroup. Clients can access the service through existing bank systems, according to reports on Sept. 18. Global head of the Citi’s services division, Shahmir Khaliq, said: “The development of Citi Token Services is part of our journey to deliver real-time, always-on, next generation transaction banking services to our institutional clients,” Citigroup Debuts Token Service in Latest Foray Into Digital Assets Turns out regulators don’t hate digital assets… they just want their banker buddies to catch up. 🙂https://t.co/N8y8LBULU2 — Gabor Gurbacs (@gaborgurbacs) September

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The move appears to be a part of a wider push to offer digital assets to institutional clients.

The tokens represent a claim against the bank and are processed on a private blockchain owned and managed by Citigroup. Clients can access the service through existing bank systems, according to reports on Sept. 18.

Global head of the Citi’s services division, Shahmir Khaliq, said:

“The development of Citi Token Services is part of our journey to deliver real-time, always-on, next generation transaction banking services to our institutional clients,”

Tokenized Deposits

The service aims to improve cross-border money transfers, which can currently take days due to different systems, work hours, holidays across countries, and archaic banking technology.

The “tokenized deposits” or transferable digital coins are processed on the blockchain, meaning settlement is instantaneous.

Users will not have to set up their own crypto wallets and will be able to access the service through the bank’s existing systems.

The launch follows a test by Citigroup, the New York Fed, and other banks using digital tokens representing customer deposits. These are settled through central bank reserves on a distributed ledger.

The pilot proved to the Federal Reserve that digital dollars have the ability to improve wholesale payments and that the use of the blockchain did not alter the legal treatment of the deposits.

Ryan Rugg, global head of digital assets at Citigroup’s treasury and trade solutions division, said:

“Our solutions within the Citi network are complemented by inclusive and open industry collaboration on initiatives like the Regulated Liability Network.”

Last week, Citi became the first digital custodian for the BondbloX blockchain bond exchange.

US banking giant JPMorgan is also exploring a similar blockchain-based digital deposit token for faster cross-border payments and settlement, according to Bloomberg.

RWA Value Surges

Citigroup is the latest institution to embrace the tokenization of real-world assets (RWA).

According to Galaxy Research, the total value of all tokenized real-world assets reached an all-time high of over $3 billion in August.

Assets included sectors such as gold and precious metals, equities, money markets, carbon offsets, treasuries, real estate, and private credit.

Moreover, tokenized treasuries have seen explosive growth this year, increasing by around 450% since the beginning of 2023, according to rwa.xyz.

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