Capital markets News

Citi trials fund tokenization on Avalanche blockchain


Today Citi announced its latest blockchain proof of concept involving the tokenization of a private fund within the Avalanche blockchain ecosystem. The tokenized fund was one of Wellington Management’s private equity funds, and the test also involved WisdomTree and ABN Amro.

Citi isn’t the first institution to spot the potential for private fund tokenization. It’s a $10 trillion asset class where processes are more manual and less standardized. 

In this case, smart contracts encoded the fund distribution rules. Other features trialed included identity credentials and using the fund token as collateral for an automated lending contract with DTCC Digital Assets (formerly Securrency).

“Smart contracts and blockchain technology can enable enhanced rule-enforcement at an infrastructure-level, allowing data and workflows to travel with the asset,” said Nisha Surendran, Emerging Solutions Lead for Citi Digital Assets. “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.” 

ABN Amro played the role of a traditional investor requesting the tokenization. The tokens were transferred to hypothetical WisdomTree clients.

The proof of concept was executed on the Avalanche Spruce testnet, a permissioned subnet with institutional validators. Wellington, T.Rowe Price, WisdomTree and Cumberland first started using the Spruce testnet early last year. Tokenization firm Tokeny was involved in helping with identity and as the developer of the ERC-3543 tokenization standard.

It’s also not Citi’s first experience on Avalanche. Last year Citi trialed an FX solution with T.Rowe Price and Fidelity International. It was part of Singapore’s Project Guardian tokenization trials.

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