23 September 2023

Digital Technology Guru

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Citigroup Launches Token Service for Institutional Clients

2 min read
Citigroup Launches Token Service for Institutional Clients

Citigroup Inc. has introduced a new token service called Citi Token Services as part of its efforts to offer digital assets to institutional clients. The service allows customers to convert their deposits into digital tokens that can be sent instantly around the world. The service is currently housed within Citigroup’s treasury and trade solutions division, which has previously focused on improving cash-management and trade-finance capabilities. Shahmir Khaliq, global head of the company’s services division, explained that the development of Citi Token Services is part of the bank’s aim to deliver real-time, next-generation transaction banking services to its institutional clients.

Unlike traditional transfers that can take days due to multiple systems and different work hours across countries, Citigroup’s tokenized deposits are processed on a private blockchain owned and managed the bank. This means that settlement is instantaneous and clients can access the service through the bank’s existing systems without the need to set up their own digital wallets.

Citigroup’s move to offer tokenized deposits follows its participation in a test of a Regulated Liability Network. This network, which included Citigroup, a unit of the Federal Reserve Bank of New York, and global banks, allowed banks to simulate issuing digital money on a distributed ledger. The successful test demonstrated the ability of digital dollars to improve wholesale payments and did not alter the legal treatment of the deposits.

By initially focusing on trade finance, Citigroup aims to bring digital offerings to an industry that has long relied on paper processes and manual procedures. For example, in the shipping business, companies often use letters of credit from banks to pay suppliers. With the use of smart contracts on a blockchain, transactions can be processed faster, removing the need for stacks of paper.

Citigroup has already tested its tokenized deposit service with a canal authority and A.P. Moller-Maersk A/S, one of the largest ocean-cargo companies. The pilot showed that the bank could instantly transfer tokenized deposits to suppliers based on smart contracts. This innovative solution has promising applications for trade finance.

– Citigroup Inc.
– Bloomberg News