Citi to launch tokenized securities for private companies to its affluent users

Citigroup officially unveiled a product called Digital Depositary Receipts today, created to give its affluent and institutional clients a way to buy into private companies through blockchain-recorded securities issued and governed by the bank.

Citi is betting on this launch of a tokenized securities product for private companies cracking open a private market that has historically been difficult for even wealthy individuals to take part in.

How does the product work?

The product’s structure is similar to depositary receipts, a decades-old instrument banks use to let investors hold exposure to foreign shares. Citi adapted the model for private markets by letting the bank issue a digital receipt recorded on blockchain infrastructure run by SIX, the Swiss market operator.

Investors hold the receipt rather than the underlying equity, and Citi serves as both the issuer and custodian. The first transaction using the product involved Kaleido, a tokenization firm backed by Citi Ventures and wealth management investors at the bank.

“Our focus with Digital Depositary Receipts is to continue to expand responsible access to digital asset markets,” a Citi spokesperson mentioned to WSJ.

The banking firm has also said it is discussing with some of the world’s largest private companies about participating in the platform directly, according to Yahoo Finance.

Citi joins tokenized market race

Robinhood Markets (NASDAQ: HOOD) already sells tokenized shares of OpenAI and SpaceX to its European users, with Republic also offering blockchain-based tokens that track private company equity, Yahoo Finance reported.

The wider tokenized-asset push continues to develop at a rapid rate across major banks. Earlier this month, Citi joined several of the largest U.S. lenders in a plan to build a shared tokenized deposit network through The Clearing House, targeting a mid-2027 launch. That system would convert conventional bank deposits into blockchain tokens while keeping funds inside the regulated banking system.

The U.S. bank has been positioning for this shift since at least 2023, when the bank forecast the tokenized securities market could hit $4 trillion by 2030, calling it the potential “killer use-case” for blockchain technology. In that same year, Citi ran an initial pilot of its Token Services product, converting customer deposits into digital tokens on a private blockchain for next to immediate transfers.

What next for Citi’s new product?

Citi has mentioned plans to expand to even more public blockchains over time, as the Digital Depositary Receipts run purely on SIX’s private infrastructure only in the moment. This could open access beyond its current wealthy and institutional client base.

The product is also launching into a market where demand for private-company stakes has increased massively. With some big firms having coming IPOs, and some being delayed even further, investors are searching for alternative routes into firms that may not trade publicly in the short term.

Citigroup shares have climbed by about 70% over the past 12 months to trade around $133.38 as at the time of writing.

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