From Ledger Insights

A year ago, Citi unveiled two tokenized deposit solutions in pilot mode. Citi Token Services for Cash enables enterprises and institutions to move money between Citi branches around the world 24/7. This is now available commercially, with Mars as one of the first clients.

The second solution, Citi Token Services for Trade, is still in pilot mode with new pilot transactions with shipping agents, CB Fenton and GAC Panama Shipping.

“The continued progress of Citi Token Services is a key component of Citi’s pursuit of real-time, always-on services for its institutional clients,” said Ryan Rugg, Head of Digital Assets, Treasury and Trade Solutions, Citi. “By using Distributed Ledger Technology (DLT) and smart contracts, Citi has created a patented programmable payment and liquidity platform, which will reduce costs and streamline processes.”

In a statement, the bank emphasized the ability to process high value transactions and that clients don’t need to hold or manage the tokens.

“This solution has enabled us to initiate and program instant payments and liquidity movement between our Citi accounts, reducing the friction caused by cutoff times and streamline our transactions by tokenizing cash,” said Mayela Stuparitz, Mars’ Global Treasury Director. “With Citi’s private blockchain, we can access all the benefits of blockchain, without any complexity or additional risk – our processes, reporting, and operational risk remain identical.”

The bank mentioned that the solution is live in Singapore and New York and it continues to add branches. This is a point that’s not always fully appreciated. Global banks have separate system installations around the world. When rolling out a new solution such as this, each jurisdiction has to go through all the legal and technical compliance requirements as well as integrations. The scale of work differs from a domestic rollout.

DLT payments for trade and shipping

While Mars mentioned bank cutoff times, these are also highly relevant for shipping transactions. Before its demise, Signature Bank ran an internal DLT payments network. While Signature was known for servicing crypto clients, it turned out that shipping clients accounted for the highest volume of DLT transactions before FedNow launched. That’s because container ships are frequently unloaded outside of banking hours, and payment is required for cargo release. Hence, the ability to make transactions 24/7 helps to address delays because banks are closed.

Citi takes this a step further with Citi Token Services for Trade, using smart contracts to automatically release cash when conditions are satisfied. It says it replaces traditional trade finance instruments, such as guarantees and letters of credit, with smart contracts backed by tokenized cash. CB Fenton and GAC Panama Shipping used the service to streamline payments for global shipping.

Citi Token Services works on a private internal blockchain network, using Hyperledger Besu.

The bank has also helped to initiate multiple interbank tokenized deposit networks, including the UK’s Regulated Liability Network and the Regulated Settlement Network stateside.