Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
The major American banking institution Citi has recently finalized a proof-of-concept (PoC) aimed at tokenizing traditional finance (TradFi) assets and distributing them via blockchain.
The global investment bank and financial services firm utilized Avalanche’s Evergreen subnet Spruce “for its multi-level permissioning, EVM compatibility, institutional focus, and customizability,” as stated in a report regarding the initiative.
In the simulation, Citi employed a Wellington Management private equity fund as the issuer of the underlying asset. Dutch bank ABN AMRO acted as the investor, while asset manager Wisdom Tree simulated the wealth management platform.
Citi indicated that the tokenized fund could be programmed with smart contracts to “automate operations, settle more quickly, and enable new and composable use cases.” The bank also noted that it maintained control over the tokens and could leverage smart contracts to ensure “compliance-by-design.”
The report emphasized that blockchain technology enabled use cases “that were previously unfeasible.” One example provided was “utilizing a private asset fund token as collateral to borrow more liquid asset tokens.”
Overall, Citi determined that tokenization presented a “meaningful improvement” to current financial services “and is likely a necessary step for achieving scale.”
Its PoC concluded that blockchain technology introduces new use cases and distribution channels while promoting “always-on compliance, including through a fully traceable audit trail.”
Interest in Tokenized Assets Beyond Citi
Related Posts
Citi is not the only major bank aiming to transition TradFi assets onto the blockchain.
As the TradFi sector embraces and integrates blockchain technology, several large institutions have begun investigating tokenization.
In November 2023, JP Morgan and Apollo completed their own PoC demonstrating the tokenization of funds on any major blockchain. This PoC was carried out by JP Morgan’s crypto division Onyx.
Since 2019, the bank has been utilizing a private in-house Ethereum-based USD stablecoin known as JPM Coin to facilitate customer dollar transactions.
In December 2023, France’s third largest bank Société Générale executed a €10 million issuance of green bonds on-chain.
Other prominent financial institutions that have started to explore tokenization include Franklin Templeton, Standard Chartered, and South Korean asset manager Mirae.
According to Dune Analytics, the market capitalization of tokenized securities currently exceeds $488 million.
The post Citi Innovates with Avalanche Blockchain to Tokenize Private Equity Funds appeared first on Cryptonews.
