Citigroup has launched a blockchain-based marketplace for trading shares of private companies, according to a report from CoinTelegraph. The platform will issue tokenized depositary receipts representing ownership in these firms, marking the bank's latest foray into digital asset infrastructure.
The move comes as Wall Street institutions increasingly adopt tokenization technology, with several major banks experimenting with blockchain-based settlement and trading systems. Citi's marketplace appears designed to address liquidity challenges in private markets, where shares are traditionally difficult to buy and sell compared to public equities.
Regulatory clarity around tokenized securities remains uneven. While the SEC has taken an aggressive stance on some crypto projects, tokenized versions of traditional assets like stocks and bonds have generally received a warmer reception from regulators. Citi's status as a federally regulated bank may provide additional compliance assurances.
The private company share market, estimated at trillions of dollars in value globally, represents a significant opportunity for financial intermediaries. Citi's entry could pressure competitors like Goldman Sachs and JPMorgan to accelerate similar blockchain initiatives.
However, skepticism persists about whether blockchain-based trading venues can achieve sufficient volume and adoption to challenge established private placement markets. Network effects remain a hurdle, as liquidity depends on broad participation from both issuers and investors.