Investment banking giant Citigroup today announced the launch of a digital token service for institutions.
The Citi Token Services product uses blockchain technology and smart contracts to enable its institutional clients to quickly send money across borders, Citi said Monday. The technology will use a private, non-public blockchain like Bitcoin or Ethereum.
He added that Citi Token Services will provide automated trade finance solutions 24/7.
“Digital asset technologies have the potential to modernize the regulated financial system by applying new technologies to existing legal instruments and well-established regulatory frameworks,” Shahmir Khaliq, Citi’s global head of services, said in a statement.
The idea, according to Citi, is to streamline the process of completing large transactions by digitizing bank guarantees and letters of credit in the trade finance ecosystem.
The bank worked with integrated logistics company Maersk on a pilot project to see how it would work in the shipping sector, Citi’s statement Monday said. The shipping industry can be challenging for banks as collecting payments and processing transactions can be tedious and complex.
Citi said the technology used in the pilot “is expected to reduce transaction processing times from days to minutes.”
Marie-Laure Martin, Maersk Regional Head of Treasury for the Americas, added: “We are delighted to have collaborated with Citi on the successful pilot testing of the collateral solution using digitized tokens and smart contracts.
Citi Token Services has also been applied to a global cash management pilot, enabling its institutional clients to transfer cash between Citi branches 24/7, the bank added.
In a March report, Citi said that the world of digital assets was approaching an “inflection point” and that crypto adoption will be primarily fueled by the rise of central bank digital currencies (CBDCs) and the tokenization of real-world assets.