Citigroup Ventures into Digital Finance with Citi Token Services

Citigroup has made a significant stride into the world of digital finance with the recent announcement of their experimental program, Citi Token Services. This program aims to cater to the affluent customer segment by harnessing blockchain technology and smart contracts to convert customer deposits into digital tokens, facilitating cross-border transactions and instant blockchain-based payments.

Unlike many others in the blockchain space, Citigroup’s service will initially operate on a private blockchain, one that the bank has developed and maintains themselves, rather than relying on established public blockchains like Ethereum. This means that customers won’t need to create digital wallets but can access the service directly through the bank’s existing systems.

The bank has successfully completed a pilot program of this new product in the maritime transport industry, specifically partnering with Denmark’s Maersk. Overall, this initiative is part of Citigroup’s broader strategy to expand its digital services and meet the demand for 24/7 cross-border payments, which require high liquidity.

The implementation of blockchain technology enables immediate “matchmaking” of payments as soon as the buyer and seller reach an agreement, a stark contrast to traditional channels that can be time-consuming and labor-intensive.

Citigroup, headquartered in Manhattan, New York City, takes pride in being the third-largest bank in the United States by asset value, with a global network of services. They are not alone in their ambitions to carve a slice of the blockchain-based money transfer market, as other major players like Visa, JPMorgan, PayPal, and SWIFT are also venturing into this space.

In another groundbreaking move, Citigroup has been announced as the first digital custodian for the BondbloX exchange, according to a statement released on September 15th. BondbloX, overseen by the Monetary Authority of Singapore (MAS), is the world’s first fractional bond trading platform utilizing blockchain technology.

This new partnership allows Citigroup’s clients to access BondbloX’s bond trading services, with Citigroup acting as the provider of payment and custody services. Nadine Teychenne, Director of Digital Asset Services at Citi Securities Services, commented on this development, stating, “This exclusive digital custody technology has the potential to expand and enable us to provide payment and custody services for blockchain-issued assets.”

BondbloX currently supports bond transactions with a minimum value of $1,000. Once encoded, these bonds are stored on a distributed ledger, enabling users to trade bonds instantly through smart contracts and signatures. In the traditional market, bond transactions can take up to 48 hours to process.

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