Citigroup announced Thursday the launch of a blockchain-based venture that enables its wealthy and institutional clients to trade shares of private companies using tokenized depositary receipts. The initiative, reported by The Wall Street Journal, is designed to broaden access to private firms at a time when many companies are delaying public listings and Wall Street is focused on forthcoming blockbuster IPOs from SpaceX, Anthropic and others.
The venture uses depositary receipts — securities that allow investors to buy stakes in foreign companies — that are authorized and tokenized by Citi. The bank will issue those securities and act as custodian. The infrastructure is operated by Switzerland-based SIX, and Citi said it will consider extensions to other blockchain networks.
“We think this is a very clear alternative model” to special-purpose vehicles that have been under scrutiny, Artem Korenyuk, Citi’s global lead for digital assets enterprise alignment and services enablement, told the Journal. With SPVs, “investors don’t know what they’re actually buying,” he said.
The venture lets clients place private-company shares “right next to their Apple stock,” Korenyuk said. It is initially open to foreign investors, with a transaction- and maintenance-based fee. Citi plans to make it available to U.S. investors later.
The bank said it is in discussions with some of the largest private companies to get involved. The venture can also be adopted by other banks, according to Citi.
Banks have been racing to adopt blockchain technology best known for powering cryptocurrencies. Citi, JPMorgan Chase and other banks plan to launch a tokenized deposit system next year, as previously reported by the Journal. Tokenized money-market funds have emerged, as well as plans for tokenized securities platforms.
Citi worked across its five business lines when the venture went live with its initial trade, in which its wealth clients invested in Kaleido, an institutional tokenization and digital-asset platform. “That definitely would not have happened a number of years ago under different leadership,” Korenyuk said.