Citi Digital Depositary Receipts put a bank-run wrapper around private-company equity, and that matters because Citi is trying to make private markets behave more like administered securities markets without forcing issuers into an IPO. The service lets wealthy and institutional clients invest in tokenized shares of private companies on a blockchain, according to American Banker.
The ledger is operated by SIX Securities Depository, with Citi serving as custodian responsible for settlement and safekeeping. The first transaction involved Citi wealth management clients investing in Kaleido, an institutional tokenization and digital asset platform that is also a Citi portfolio company.
Citi Digital Depositary Receipts turn private-company investing into bank-grade market plumbing
Citi is not pitching this as crypto speculation. It is adapting the old depositary receipt model to private companies, then recording the securities on blockchain infrastructure. That is the important part. The product is familiar in legal and operational shape, but different in how ownership and transfer records are maintained.
Citi says Digital Depositary Receipts give privately held companies another way to raise money as IPOs become more rare. The company also says issuers can improve distribution because participating companies are put in front of Citi’s institutional investor and wealth management clients. They can seek liquidity while maintaining control over voting.
That is a narrow promise, but a meaningful one. Citi is not claiming private shares suddenly become public equities. Investors hold a standard security that can sit in a portfolio alongside public stocks, while the underlying exposure remains tied to a private company.
XOOMAR analysis: the trade-off is clear. Issuers may get wider capital access and cleaner administration, but the moment a bank distributes a private-company security to wealthy and institutional clients, expectations around governance, transfer controls, and investor communication rise. American Banker does not say what reporting obligations Citi will require. That remains one of the practical questions.
Citi's blockchain service targets the SPV workaround
Citi describes the product as an alternative to an IPO or a special-purpose vehicle. CoinDesk’s account of the launch says the bank argues the structure could make private-market investing simpler and more transparent than arrangements that rely on SPVs and multiple intermediaries, according to CoinDesk.
The mechanics matter more than the branding. Investors own the depositary receipt, not the underlying shares directly. Citi acts as issuer and custodian. The blockchain record is meant to speed settlement and transfer of ownership, according to the bank.
| Route | What the source supports | Constraint still visible |
|---|---|---|
| IPO | Citi says IPOs have become more rare | Public-company route remains outside this product |
| SPV | Citi positions Digital Depositary Receipts as an alternative | Existing structures can involve multiple intermediaries |
| Citi Digital Depositary Receipts | Bank-issued security, recorded on blockchain, held with Citi custody | Fees exist, but Citi declined to say how much |
The blockchain is not the product by itself. The product is the combination of issuance, custody, settlement, client distribution, and legal structure. If any of those pieces disappoint, the ledger will not save it.
The useful numbers are implementation clues, not proof of scale
The American Banker piece does not provide private-market asset totals, IPO counts, valuation growth, or fee schedules. That absence matters. A serious read of Citi Digital Depositary Receipts should not pretend the launch already proves mass adoption.
The hard data points in the supplied reporting are operational:
- First transaction: Citi wealth management clients invested in Kaleido through the service.
- Fees: Citi said there will be transaction and maintenance fees, but declined to disclose pricing.
- 24/7 movement: Citi already offers tokenized deposits to corporate clients so they can move money globally at any time.
- 600 banks: Custodia Bank and Vantage Bank reached an agreement with Participate, described as a network of 600 banks, to use tokenized deposits in loan transactions.
- Mid-2027: CoinDesk reported that Citi joined several large U.S. banks in plans to develop a shared tokenized deposit network through The Clearing House by mid-2027.
That list shows why banks care. The opportunity is not just one private-company financing. It is control over issuance, custody, settlement, and asset servicing in areas that still carry manual work and fragmented rails.
For readers following adjacent regulated digital-asset infrastructure, this fits beside policy and market-structure questions we covered in £40B Cap Rewrites Bank of England Stablecoin Rules, though Citi’s product is a securities structure, not a stablecoin. The IPO-adjacent capital markets angle also echoes the pressure points in BitGo Stock Rips 20% as $50 Million Buyback Tests IPO Pain, but Citi’s service is aimed at private-company exposure through bank distribution rather than public-market price action.
Private shares move through a controlled corridor, not an open market
Citi wants other financial institutions to participate in this service instead of building rival versions from scratch. That detail is easy to miss, but it is central to the strategy.
A single bank can launch a tokenized private-share product. A broader market needs shared standards, trusted custody, consistent transfer controls, and regulated infrastructure that other banks are willing to use.
American Banker places Citi’s launch inside a wider set of bank tokenization projects. JPMorganChase, Citi, and Bank of America are working on a shared interbank tokenized deposit network operated by The Clearing House. Goldman Sachs and UBS have deployed digital asset platforms for digital bonds and structured notes. Anchorage Bank offers services including stablecoin issuance, custody, staking, rewards, trading, and settlement. U.S. Bank is custodian for Anchorage’s stablecoin platform.
XOOMAR analysis: this is the shift. Big banks are not trying to bypass regulated finance with blockchain. They are trying to embed blockchain records inside regulated finance, where custody, compliance, and settlement remain bank-controlled.
Founders, investors, bankers, and regulators won't value the same feature
For private-company founders and boards, the attractive part is optionality. Citi says companies can raise money, access Citi’s investor base, obtain liquidity, and maintain voting control. That could appeal to companies that want capital without immediately choosing an IPO route.
For institutional and wealth clients, the appeal is cleaner access to private-company exposure through a standard security. The risk does not vanish. Private-company valuation, exit timing, transfer limits, and disclosure gaps still matter. Citi Digital Depositary Receipts may change the wrapper, but they do not make a private company trade like a listed stock.
For Citi, the product protects a role in tokenized finance that banks understand well: issuer, custodian, settlement agent, distributor, and fee collector. American Banker says Citi will charge transaction and maintenance fees, though the bank did not disclose amounts.
For regulators, the hardest questions involve regulatory clarity, governance, and integration with existing financial systems. There is also a risk of false comfort. A blockchain record can make ownership easier to track, but it does not automatically create deep liquidity or simplify suitability controls.
The next test is whether Citi can turn one Kaleido deal into shared infrastructure
Citi Digital Depositary Receipts compete less with IPOs than with the friction around staying private longer. If the service works, it gives companies another financing route before they face public markets. If it stalls, it becomes another controlled pilot in a sector already full of them.
The evidence that would strengthen Citi’s thesis is specific: more private companies using the structure, other financial institutions joining the service, repeat investor participation, clear transfer mechanics, and public detail on how fees and custody work in practice.
The evidence that would weaken it is just as clear: limited issuer uptake, no third-party bank participation, unclear secondary liquidity, or regulatory pushback around governance and investor protection.
Citi does not need this product to feel exciting. It needs it to feel boring, compliant, and operationally reliable. In tokenized private markets, that may be the harder sell, and the more valuable one.
Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.
The Bottom Line
- Citi is using blockchain to make private-company equity easier to administer without turning it into public stock.
- Private companies may get broader capital access while avoiding the full requirements of an IPO.
- Wealthy and institutional investors could gain a more bank-grade way to hold exposure to private companies.
Originally published on XOOMAR. For more news and analysis, visit XOOMAR.
