Citigroup launches digital token service

investmentnews.com:

Citigroup Inc. debuted a token service that’s part of a broader push to offer digital assets to institutional clients. 

The product — known as Citi Token Services — will transform customers’ deposits into digital tokens that can be sent instantly anywhere in the world, according to a statement Monday. The service is housed in the firm’s treasury and trade solutions division, which has so far focused on using it to improve cash-management and trade-finance capabilities. 

“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,” Shahmir Khaliq, global head of the company’s services division, said in the statement. 

The move is the latest by an established banking giant to offer so-called “tokenized deposits,” or transferable digital coins that represent a claim against banks. Crucially, though, these tokens are processed on blockchain rails, meaning settlement is instantaneous.

For Citigroup’s new offering, the company will rely on a private blockchain owned and managed by the bank, according to the statement. Clients won’t need to set up their own digital wallet and will instead be able to access the service through the bank’s existing systems. 

Citigroup is taking aim at the problem of moving money across borders, which can sometimes take days because of the myriad systems banks and governments use and differing work hours and bank holidays across the globe. 

The new offering comes on the heels of Citigroup’s participation, along with a unit of the Federal Reserve Bank of New York and global banks, in a months-long test of a Regulated Liability Network, which allowed banks to simulate issuing digital money