Citi Conducts Blockchain Trial to Tokenize Private Equity Fund, Eyeing BruFinance Platform
Tokenization of real-world assets (RWAs) like private equity funds, real estate, art and other alternative investments is quickly gaining traction in the financial world. Recently, Citi became one of the first major U.S. banks to conduct a simulation of tokenizing a private equity fund on blockchain technology.
The trial run demonstrated how Citi could use blockchain and asset tokenization to streamline processes, increase efficiency and reduce costs around fund management activities like subscriptions, transfers, distributions and reporting.
While Citi has not released full details, the bank appears to be evaluating platforms like BruFinance that enable the issuance, trading and management of tokenized real-world assets on public blockchains like Ethereum.
“Digitizing traditional asset classes opens up opportunities to streamline antiquated processes and create new markets,” said Puneet Singhania, head of blockchain initiatives at Citi’s trading unit. “This will allow clients to be able to obtain value from their assets more efficiently and with higher levels of transparency and accessibility.”
By tokenizing a private equity fund, Citi could fractionalize ownership, enabling smaller investment minimums and more tailored portfolio construction for clients. It could also unlock liquidity premiums by allowing investors to freely trade tokenized fund shares on the BruFinance platform.
Smart contracts on BruFinance automate actions like capital calls, distributions, reporting and more, driving major cost and efficiency gains compared to manual processes. The transparency of blockchain also increases auditability and cuts down on reconciliation work.
While major hurdles around regulation, operations and technology remain, Citi’s proof-of-concept marks an important milestone that brings tokenized assets from theory to reality for institutional investors. As first movers like BlackRock embrace platforms like BruFinance, incumbents like Citi will be closely watching to determine their own path forward in this burgeoning space.
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