As IPO timelines stretch, private companies are seeking alternate routes to access liquidity instead of navigating fragmented secondary markets, the firm said in a statement. These markets often require navigating structures that can, in some cases, be difficult to understand, involve multiple intermediaries and less transparent fees. Citi’s new solution addresses this gap by delivering an efficient, cost-effective and digitally-native solution for an historically illiquid segment of capital markets.

Building on its depositary receipts and custody businesses, Citi’s model uses tokenized depositary receipts to provide a flexible, institutional-grade alternative capable of meeting the scale needed for private markets. While other structures like third-party special purpose vehicles serve a valuable market function, Citi said its model can reduce the potential for complexity and hidden costs given that Citi acts as a single, trusted issuer and custodian.

Digital Depositary Receipts applies Citi Issuer Services’ depositary receipt product to private market shares, using blockchain infrastructure operated by SIX – one of the world’s first fully-regulated digital central securities depositories – to tokenize those shares.

This new solution went live with a transaction between Kaleido, an institutional tokenization and digital asset platform and a Citi portfolio company, and investors within its wealth business, with support from Citi’s Secondary Private Markets business. This launch represents a coordinated One Citi effort, bringing together its issuer services, custody, wealth, markets, and ventures teams to enhance the client experience and establish a scalable model for future issuances, the firm continued.

“As private markets continue to grow, so has the need for diverse and trusted access points. Our Digital Depositary Receipts product is designed to provide superior client service, safeguard assets and facilitate capital markets activity with the same rigor that underpins traditional financial markets,” Biswarup Chatterjee, head of partnerships and innovation for Citi’s services business said. “The interoperability of the product will further enable Citi to support a wider range of issuers and investors as digital asset market infrastructure continues to evolve.”

The innovation is designed to ensure issuers receive efficient distribution and transfer without the need for public listing or altering underlying ownership rights. Companies maintain control over voting and a more simplified cap table management structure while broadening investor outreach.  

For Wealth clients, this product expands access to offerings through a familiar investment structure. By integrating tokenized depositary receipts into existing Wealth platforms, Citi aims to enhance client optionality while maintaining the operational safeguards and client experience investors expect.