Citigroup Introduces Token Service to Institutional Clients
Citigroup, one of the largest banking institutions in the United States, is making a move to offer digital assets to its institutional clients. In a recent announcement, the bank revealed that it has launched a token service that allows clients to access and transfer “tokenized deposits” using a private blockchain owned and managed by Citigroup. This new service aims to address the challenges associated with cross-border money transfers, which can often take days due to differences in systems, work hours, and holidays across countries, as well as outdated banking technology.
According to Citigroup, the use of blockchain technology enables instantaneous settlement of transactions, eliminating the delays and inefficiencies commonly associated with traditional cross-border transfers. What sets this token service apart is that clients can access it through the existing systems provided by the bank, without the need to set up their own cryptocurrency wallets. This streamlined approach ensures a seamless user experience for institutional clients.
The launch of this token service follows a successful pilot test conducted by Citigroup, the New York Fed, and other banks. The pilot involved the use of digital tokens representing customer deposits, settled through central bank reserves on a distributed ledger. The results of the pilot demonstrated to the Federal Reserve that digital dollars can indeed enhance wholesale payments without altering the legal treatment of the deposits.
Ryan Rugg, the global head of digital assets at Citigroup’s treasury and trade solutions division, expressed optimism about the future of such initiatives. He stated, “Our solutions within the Citi network are complemented by inclusive and open industry collaboration on initiatives like the Regulated Liability Network.” This suggests that Citigroup is actively working with other industry players to further drive the adoption and integration of digital assets in the banking sector.
Citigroup’s foray into tokenizing real-world assets is part of a growing trend in the financial industry. According to Galaxy Research, the total value of all tokenized real-world assets reached a record-breaking $3 billion in August. These assets represent various sectors, including gold, precious metals, equities, money markets, carbon offsets, treasuries, real estate, and private credit. Tokenized treasuries, in particular, have experienced remarkable growth this year, with a staggering 450% increase since the beginning of 2023, according to rwa.xyz.
It’s worth noting that Citigroup is not alone in exploring the potential of blockchain-based digital assets. JPMorgan, another prominent US banking giant, is also reportedly exploring the development of a similar digital deposit token for faster cross-border payments and settlement.
As financial institutions continue to embrace the tokenization of real-world assets, it is expected that the adoption of digital assets will continue to grow. This shift toward digitalization has the potential to revolutionize traditional banking systems while offering new opportunities for enhanced efficiency and transparency. With Citigroup leading the way in offering token services to institutional clients, the future of digital assets in the financial sector looks promising.
Quotes:
“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.” – Shahmir Khaliq, Global Head of Citi’s Services Division.
“Our solutions within the Citi network are complemented by inclusive and open industry collaboration on initiatives like the Regulated Liability Network.” – Ryan Rugg, Global Head of Digital Assets at Citigroup’s Treasury and Trade Solutions Division.
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About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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