Citigroup Launches Its Own Digital Token And Blockchain
Citigroup Inc. is making a strategic foray into the world of digital assets with the launch of a groundbreaking digital token service and blockchain platform. The $1.72 trillion asset management powerhouse is introducing “Citi Token Services,” its digital solution tailored for real-time payments.
With Citi Token Services, customers’ deposits will undergo a transformation into digital tokens, opening the door to instantaneous cross-border transfers to anyone, anywhere in the world. Spearheaded by Citigroup’s treasury and trade solutions division, this pioneering initiative is set to redefine the landscape of transaction banking services for institutional clients.
Shahmir Khaliq, the global head of the company’s services division, elucidated, “The development of Citi Token Services is part of our journey to deliver real-time, always-on, next-generation transaction banking services to our institutional clients.”
To power the Citi Token service, Citigroup has harnessed the capabilities of a private blockchain wholly owned and operated by the company itself.
This development follows an extensive period of testing within a regulated liability network. This network is designed to empower banks to simulate the issuance of digital currency that represents their customers’ funds, subsequently settling these transactions via central bank reserves on a distributed ledger. The test initiative, aimed at demonstrating the potential for digital currency to enhance wholesale payments, specifically targeted the Federal Reserve.
One noteworthy aspect of Citi Token Services is that Citigroup members will not be required to establish a separate digital wallet to avail themselves of this cutting-edge feature. Accessibility is seamlessly integrated into Citibank’s existing infrastructure. Furthermore, the reach of Citi Token Services extends to a global cash management pilot, allowing clients to transfer liquidity across Citi branches on a 24/7 basis, enhancing flexibility and efficiency.
This move comes after fellow payment platform PayPal introduced its own USD stablecoin in August, with indications suggesting potential extensive usage in the realm of Decentralized Finance (DeFi). Reports also suggest that PayPal is integrating its various features into a comprehensive “Cryptocurrency Hub.”
In the US, the Federal Reserve has recently issued a comprehensive policy statement clarifying its stance on state member banks engaging in certain activities involving digital currencies, particularly dollar tokens, merely days after PayPal launched its stablecoin.
In essence, the policy statement sets forth a presumption that the Federal Reserve will exercise its discretion to limit state member banks and their subsidiaries to engaging as principal in activities that are permissible for national banks. In order to confirm compliance with this prerequisite, a state member bank must obtain written confirmation of supervisory nonobjection from the Federal Reserve before commencing the intended activities.
In the aftermath, PayPal announced its decision to temporarily halt cryptocurrency buying services in the United Kingdom. This strategic pause is slated to commence on October 1, 2023, with a tentative resumption date set for early 2024.
Information for this story was found via Watcher.Guru and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
