Citigroup recently launched an initiative that seeks to broadens access to private markets for both global issuers and investors.
Citigroup’s launch of Digital Depositary Receipts on private shares marks the first time a global financial services company is both issuing and acting as a custodian for tokenized depositary receipts representing private companies.
Private companies are seeking alternate routes to access liquidity instead of navigating fragmented secondary markets. These markets often require navigating structures that can be complex and difficult to understand. Citi’s new solution addresses this concern by delivering an efficient solution for an illiquid segment of capital markets.
Citi’s model uses tokenized depositary receipts to provide an institutional-grade alternative capable of meeting the scale needed for private markets. Citi’s model can reduce the potential for complexity and hidden costs given Citi acts as a single, trusted issuer and custodian.
“As private markets continue to grow, so has the need for diverse and trusted access points. Our Digital Depositary Receipts product is designed to provide superior client service, safeguard assets and facilitate capital markets activity with the same rigor that underpins traditional financial markets. The interoperability of the product will further enable Citi to support a wider range of issuers and investors as digital asset market infrastructure continues to evolve,” Bis Chatterjee, head of Partnerships and Innovation Services at Citigroup, said.
Digital Depositary Receipts applies Citi Issuer Services’ depositary receipt product to private market shares, using blockchain infrastructure operated by SIX — one of the world’s first fully regulated digital central securities depositories — to tokenize those shares. Citi serves as a custodian on the platform, responsible for the settlement and safekeeping of the tokenized depositary receipts.
“As digital assets reshape how financial markets evolve, our priority is ensuring Citi Wealth clients can engage with these developments in a secure and familiar way,” Deborah Querub, head of Digital Assets for Wealth at Citi, said. “We’re focused on responsibly expanding access to new types of investment opportunities while preserving the structures, protections, and experience our clients expect. This transaction is an incremental step in our process of leveraging digital capabilities to enhance options for our Wealth clients.”
The new solution went live with an inaugural transaction between Kaleido, an institutional tokenization and digital asset platform and a Citi portfolio company, and investors within its Wealth business.
This innovation is designed to ensure issuers receive efficient distribution and transfer without the need for public listing or altering underlying ownership rights. For Wealth clients, by integrating tokenized depositary receipts into existing Wealth platforms, Citi aims to enhance client optionality while maintaining operational safeguards and the client experience.
Citi is considering future extensions of this offering to operate across both digital and traditional financial market infrastructures, as well as multiple blockchain networks.