Citi Launches Tokenized Private Equity Platform for Wealthy Clients

Citigroup (C) launched a blockchain platform that lets institutional and wealthy investors trade tokenized equity stakes in private companies. The platform builds on Citi's own digital-asset custody and settlement infrastructure. It handles issuance, custody, settlement, and trading within the bank's own systems, reducing counterparty risk relative to pilots that outsourced parts of the process.

The platform targets a structural problem in private equity: investors are locked into funds for years with no secondary market. Typical private equity funds lock capital for 7 to 10 years. A secondary market exists but is opaque and illiquid. Tokenization can create a more accessible market where holders exit early and new buyers enter without long commitments.

Citi's platform operates on a permissioned blockchain, meaning only approved participants can transact. The bank controls who holds the tokens and ensures compliance with KYC and AML rules. Citi holds the underlying private company stakes and issues tokens representing ownership, a structure similar to a depositary receipt. That structure gives token holders a legal claim to the underlying equity while keeping settlement and custody within the bank's regulated system.

Goldman Sachs ran a similar tokenization pilot in 2022. JPMorgan operates its own blockchain settlement system. Citi's platform goes live with a specific focus on private equity, a market where the liquidity bottleneck is most acute. The bank said the platform will initially handle stakes in a handful of private companies, with plans to expand to additional companies and potentially other asset classes such as real estate.

Citi's wealth management business gives it a built-in distribution channel. Pure crypto-native tokenization platforms often lack that ready pool of buyers. Many have struggled to generate institutional demand for tokenized real-world assets. Citi's client relationships remove a key hurdle: finding buyers for illiquid stakes.

Accredited investor rules restrict participation to individuals with net worth over $1 million or income over $200,000. Citi's platform operates under those exemptions. The bank's wealth management clients are typically accredited investors, giving the platform a qualified buyer base.

The regulatory path is constrained. Tokenized securities fall under securities laws in most jurisdictions, limiting who can trade them and how. Citi's platform operates under exemptions for accredited investors and private placements, restricting the pool to qualified purchasers. That reduces legal risk but also limits the addressable market, a constraint shared by all institutional tokenization platforms.

Private equity secondary market volumes have grown in recent years as funds use continuation vehicles and strip sales to manage exits. Tokenization offers a more continuous secondary channel.

For crypto investors, Citi's launch shows that tokenization is not limited to crypto-native platforms. Traditional banks are building live markets for tokenized assets using their own infrastructure. The launch confirms that institutional tokenization is shifting from pilot projects to revenue-generating products. Citi is one of the first major US banks to offer a live tokenized equity platform to clients. The platform gives other banks a benchmark to measure their own efforts against.

The bank declined to disclose the number of private companies or the total value of stakes on the platform at launch.