Wall Street giant Citigroup is reportedly planning to tokenize the shares of private companies. The bank is already pitching the idea to a group of private companies to participate in the initiative. With this, the banking giant is looking to let regular or smaller investors buy shares in big and profitable private companies.
At a time when massive private companies like SpaceX, OpenAI, and Anthropic are eventually going public, Citigroup reportedly identified an opportunity to position itself as a provider of tokenized versions of private company shares.
Through the initiative, investors will be given the option to manage their private company shares and regular public stocks all in one place, the Wall Street Journal citited Citi’s Artem Korenyuk as saying. Korenyuk serves as Citi’s global lead for digital assets enterprise alignment and services enablement.
As part of the initiative blueprint, Citi will essentially create special digital certificates to represent ownership in these private companies. These certificates will be called tokenized depositary receipts. Citi will not only handle the generation of these digital certificates and serve as the custodian of these tokenized shares.
These tokenized deposits, Citi said, could become trusted alternatives to other ways that investors access private firms like special-purpose vehicles.
In the first phase of the service roll out, it will be available to foreign investors only. Citi will levy a transaction and maintainance fee — exact details of whcih remain undisclosed for now.
The service will be made live for U.S.-based investors in the coming months, the report noted. More details about the service remains awaited for now.
The timing of Citi tokenizing the shares of private companies aligns with other Wall Street giants joining forces to adopt the blockchain technology more extensively.
Earlier this month, some of the biggest banks in the U.S. started considering the use of blockchain to upgrade their deposit systems. The banking heavyweights include JPMorgan Chase, Bank of America, and Citigroup among others.
This on-chain infrastructure for bank deposits — being build to support the rising stablecoin adoption — is expected to go live by 2027.
