Citi has launched a tokenized share offering that uses blockchain technology to connect investors with private company equity. The product works through digital depositary receipts — essentially blockchain-based IOU tokens that represent ownership in a private firm's stock. It's a move that could make traditionally illiquid private equity easier to trade and settle.
How digital depositary receipts work
Think of a depositary receipt as a certificate issued by a bank that represents shares in a foreign company. Citi is doing something similar, but instead of paper, it's issuing tokens on a blockchain. Investors buy the tokens, which are backed by actual shares held by a custodian. The tokens can then be traded in secondary markets, giving holders a way to exit before an IPO or acquisition — something that's been hard to do in private markets.
Why Citi is moving now
Private company equity is a huge, but mostly locked-up, asset class. Pension funds, endowments, and wealthy individuals have long wanted easier access. Citi's push comes as other banks experiment with tokenized everything — from bonds to funds. By putting private shares on a distributed ledger, Citi is betting that blockchain can reduce settlement times and cut out middlemen. The timing also lines up with a broader regulatory shift: the SEC and European authorities have been issuing more guidance on digital asset securities this year, making it safer for big banks to step in.
What this means for private markets
If Citi's offering gains traction, it could open up a new channel for companies to raise capital without going public. Startups that want to stay private longer but still reward employees and early backers with liquidity now have a structured path. That said, tokenization still carries risks — smart contract bugs, custody headaches, and uncertain tax treatment. Citi hasn't disclosed which private company is behind the first offering, only that it's a 'well-known growth-stage firm.' The bank plans to expand the product later this year.
For now, this is a pilot. Citi will need to show that the digital depositary receipts can handle real volume and that regulators won't balk at a major bank facilitating tokenized equity trading. If it works, expect rivals to follow.
