U.S. banking giant Citigroup (C) has started a tokenization service for cash management and trade finance for institutional clients using blockchain technology and smart contracts, the bank said Monday.
The smart contracts serve the same purpose as bank guarantees and letters of credit, the bank said.
In a pilot, the bank worked with shipping company Maersk and a canal authority to try and expedite the processes, which are generally lengthy and arduous owing to the paperwork and manual processes involved.
"Institutional clients have a need for ‘always-on,’ programmable financial services and Citi Token Services will provide cross-border payments, liquidity and automated trade finance solutions on a 24/7 basis," the bank said.
In a March 2023 report, Citi forecast that tokenization of digital securities would be a $4 trillion-$5 trillion market by 2030.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.