Citi expands crypto asset services with bond custody and tokenized deposits. Global investment bank becomes digital custodian of BondbloX fractionalized bond exchange. Citi has also launched a pilot program to convert customer deposits into crypto tokens, according to a report.
Giant investment bank expands in the crypto world
cryptokoin.com As we reported, Citigroup is expanding its crypto asset services with a new custody partnership. It is also launching a pilot program for tokenized deposits. The global investment bank said on Sept. 15 that it has become the first digital custodian for the BondbloX Bond Exchange. BBX is regulated by the Monetary Authority of Singapore. It is also described as the world’s first fractional bond exchange using atomic settlement and distributed ledger technology. The partnership will provide Citi’s eligible clients with access to BBX’s fractional bond trading. The investment bank will also provide clearing and custody services. Nadine Teychenne, Head of Digital Assets at Citi Securities Services, said the following on the subject:
This proprietary crypto custody technology is scalable and will allow us to provide clearing and custody services for clients investing in assets issued on permissioned blockchain networks.
BBX allows investors to buy and sell $1,000 portions of traditional wholesale bonds. Crypto bonds are held on a distributed ledger. This allows users to exchange almost instantly via atomic consensus. Traditionally, bond transactions take approximately 48 hours to finalize. However, atomic consensus uses innovations in the Blockchain industry such as smart contracts and digital signatures in the form of public or private keys for automatic clearing and reconciliation.
What do the parties expect from the crypto partnership?
Citigroup collaborated with BondbloX in 2021. In this regard, it became the custodian of BondbloX’s traditionally issued bonds. The latest development gives Citigroup custody of partial, tokenized versions of the underlying bonds. According to the press release, Citigroup’s custodial authority across the entire financial vertical opens these products to a broader base of institutional investors.
The partnership developed with Citi will also provide BondbloX users with greater access to the global bond market. Thus, it will allow them to have a more diverse portfolio of crypto assets. BondbloX Founding Partner Dr. Rahul Banerjee stated:
This partnership will enable Citi’s clients and others to enjoy the full benefits of bond trading almost immediately, along with Citi’s securities services support. Digital Custody is the next big step in the transformation of the bond market by making bond markets more transparent, electronic and accessible to everyone. Now bonds are more accessible to everyone.
New step in banking: Tokenized deposits
Citigroup will also use a private blockchain owned and managed by the investment bank. To this end, it is launching a pilot program to convert customer deposits into crypto tokens. According to Bloomberg, the product, called Citi Token Services, converts customer deposits into digital tokens, enabling instant global transfers processed on blockchain-based payment rails.
The pilot is part of Citi’s initiative to expand its crypto asset offerings and meet the needs of its institutional clients, including the provision of a highly liquid 24/7 cross-border payment service. Citi Global Services President Shahmir Khaliq underlined the following:
The development of Citi Token Services is part of our journey to deliver real-time, always-on, next-generation transaction banking services to our institutional customers.
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