Citigroup launches tokenized shares of private companies

Citigroup is making a major move in the world of blockchain by launching a platform that allows wealthy and institutional clients to trade shares of private, pre-IPO companies. The bank hopes that other major players on Wall Street will follow its lead, reports The Wall Street Journal.

The initiative works through so-called tokenised depositary receipts, securities that represent fractional ownership rights in shares of foreign companies. These are fully authorised, created and structured on-chain, with Citigroup acting as issuer and custodian.

Access to pre-IPO companies via blockchain

Citigroup is currently in talks with some of the largest private companies in the world to bring them onto the platform. The goal is to broaden access to private companies for a group of investors who normally have few opportunities to invest in pre-IPO shares.

By using blockchain technology, shares can be split into smaller, tradable units. This makes it easier for institutional parties and wealthy individuals to take positions in companies that have not yet gone public. With this move, Citigroup positions itself as one of the pioneers in the tokenisation of traditional financial assets.

Wall Street increasingly embraces tokenisation

Citigroup’s step is part of a broader trend in which large financial institutions are using blockchain technology to make traditional markets more efficient. The tokenisation of real-world assets, also known as RWA, has been gaining significant popularity among banks and asset managers recently.

Citigroup does not view the platform as an exclusive proprietary product, but as a framework that can also be adopted by other banks. Whether competitors on Wall Street will actually join in remains to be seen in the coming period. The bank appears determined, at any rate, to play a central role in the further integration of blockchain into the traditional financial system.