Citigroup Will Let Rich Clients Use Private Blockchain to Transfer Assets

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Citigroup Will Let Rich Clients Use Private Blockchain to Transfer Assets
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Investment banking giant Citigroup today announced the launch of a digital token service for institutions. 

The Citi Token Services product uses blockchain and smart contract technology to allow its institutional clients to send money across borders quickly, Citi said Monday. The technology will use a private blockchain—not a public one like Bitcoin or Ethereum. 

It added that Citi Token Services will provide automated trade finance solutions on a 24/7 basis.

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“Digital asset technologies have the potential to upgrade the regulated financial system by applying new technologies to existing legal instruments and well-established regulatory frameworks,” Citi’s global head of services Shahmir Khaliq said in a statement.  

The idea, according to Citi, is to streamline the process of making large transactions by digitizing bank guarantees and letters of credit in the trade finance ecosystem. 

The bank worked with integrated logistics company Maersk on a pilot to see how it would work in the shipping industry, Citi’s Monday statement said. The shipping industry can be a challenge for banks as collecting payments and processing transactions can be cumbersome and complex. 

Citi claimed that the technology used in the pilot “is expected to reduce transaction processing times from days to minutes.”

Maersk’s regional treasury manager for the Americas Marie-Laure Martin added: “We are pleased to have collaborated with Citi in the successful test pilots for the guarantee solution using digitized tokens and smart contracts.”

Citi Token Services has also been applied to a global cash management pilot, enabling its institutional clients to transfer liquidity between Citi branches on a 24/7 basis, the bank added. 

In a March report, Citi said that the digital asset world was nearing an “inflection point” and that crypto adoption will be powered primarily by the rise of central bank digital currencies (CBDCs) and the tokenization of real-world assets.

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