Tokenization | Feb 16, 2024

Image: Unsplash/Joshua Lawrence

Citi collaborates with Wellington Management and WisdomTree to explore the tokenization of private markets, aiming to revolutionize the $10 trillion sector

Feb 14, 2024:  Citi, in partnership with Wellington Management and WisdomTree, have successfully completed a proof of concept for the tokenization of private markets. This initiative, conducted on the Avalanche Spruce institutional test Subnet, aiming to use blockchain technology to gain operational efficiencies and new functionalities within the $10 trillion private markets sector, traditionally bogged down by complex and manual processes.

• The collaboration tested the tokenization of a Wellington-issued private equity fund, demonstrating the potential of smart contracts to streamline operations compliantly.  The result of the experiment?   Smart-contracts could enable buy- and sell-side institutions to engage with distributed ledger infrastructure in a low-risk, regulatory-compliant manner, offering unprecedented operational efficiencies.

See:  Fund Tokenization: Fractional Issuance, Streamlined Redemption, and Servicing Benefits

• By encoding fund distribution rules into smart contracts, the initiative promises greater automation and an enhanced compliance and control environment for issuers, distributors, and investors.
• Citi’s exploration into tokenization is not just theoretical; it includes practical scenarios of transfers using smart contracts, showcasing the feasibility of new operating models that could revolutionize the market.

Nisha Surendran, Emerging Solutions Lead for Citi Digital Assets:

“Smart contracts and blockchain technology can enable enhanced rule-enforcement at an infrastructure-level, allowing data and workflows to travel with the asset. We believe that by testing the tokenization of private assets, we are exploring the feasibility to open-up new operating models and create efficiencies for the broader market.”

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• Source: https://ncfacanada.org/citis-poc-success-in-private-market-tokenization/