The traditional financial sector is swiftly embracing the wave of digitization, and the latest example of this transformation comes from Citi Securities Services with its digital custody technology and tokenized bonds.
Advantages of Tokenized Bonds
BBX offers investors the opportunity to trade fractions of traditional wholesale bonds for as little as $1,000. Tokenized bonds are maintained on a distributed ledger and enable near-instantaneous transactions. Traditional bond settlements typically take around 48 hours, but atomic settlement leverages innovations from the blockchain sector, incorporating smart contracts and digital signatures in the form of public or private keys for automatic clearing and settlement.
“This proprietary digital custody technology will enable us to offer settlement and custody services to clients investing in assets issued on scalable blockchain networks.”Nadine Teychenne, Head of Digital Assets at Citi Securities Services
Access to the Global Bond Market
In 2021, Citigroup became the custodian for BondbloX’s primarily issued bonds. This recent development enables Citigroup to custody fractional and tokenized versions of these bonds. According to the press release, Citigroup’s full custody of the core bonds opens up these products to a broader base of institutional investors. The collaboration with Citi allows BondbloX users to access the global bond market more extensively, diversifying their digital asset portfolios.
“This collaboration will enable Citi’s clients and others to enjoy all the benefits of bond trading and combine it almost instantly with Citi’s securities services support. Digital Custody is the next big step in the transformation of the bond market, making bonds more accessible to everyone.”Dr. Rahul Banerjee, Co-Founder of BondbloX
Tokenized Deposits and Swift Transfers
Citigroup is also launching a pilot program to convert customer deposits into digital tokens. This initiative will leverage a private blockchain owned and operated by the investment bank. The product, known as Citi Token Services, will facilitate instant global transfers by converting customer deposits into digital tokens, with these transactions being processed on blockchain-based payment rails.
“The development of Citi Token Services is part of our journey to provide real-time, always-on, next-generation transaction banking services to our corporate clients.”Shahmir Khaliq, President of Citi Global Services