Citi pushes private-market shares onto regulated blockchain rails with digital depositary receipts

Citi has taken a notable step in the institutional tokenization market by launching Digital Depositary Receipts for private-company shares, a structure designed to give investors blockchain-based exposure to pre-IPO equity through a format that looks familiar to traditional capital markets. Rather than asking buyers and issuers to navigate ad hoc token wrappers or opaque special-purpose vehicles, the bank is positioning itself as the central issuer, custodian and settlement operator for a tokenized version of a long-standing securities instrument. For RWA markets, that matters less as a headline about blockchain and more as a practical attempt to solve distribution, custody and transfer mechanics inside a regulated institutional workflow.

According to Citi’s own launch materials, the new product places tokenized depositary receipts for private shares on blockchain infrastructure operated by SIX, the Swiss market operator’s regulated digital securities platform. Citi said it is using the model to provide direct and transparent access to private-company equity while reducing the operational friction that often comes with private-market investing. The bank’s argument is straightforward: the private-share market is large and demand is growing, but the access layer remains fragmented, paperwork-heavy and expensive. By tokenizing the receipt rather than altering the underlying ownership rights, Citi is trying to modernize the market’s plumbing without asking issuers to abandon the legal and governance structures they already understand.

The structure also gives a clearer picture of how large financial institutions want tokenization to scale. Citi said the product builds on its existing depositary-receipts and custody businesses, which means the token is not being framed as a crypto-native experiment detached from existing capital-markets infrastructure. Instead, the blockchain component sits underneath a bank-issued security that can plug into established onboarding, safekeeping and investor-servicing processes. That is a different posture from many earlier tokenized private-share offerings, which often relied on layered intermediaries or offshore wrappers that created economic exposure but left investors with limited transparency into transfer restrictions, governance rights or operational recourse.

Citi’s first live transaction is also revealing. The bank said the inaugural deal involved Kaleido, an institutional tokenization platform backed by Citi Ventures, and investors inside Citi’s Wealth business, with support from Citi’s Secondary Private Markets operation. In other words, the first use case was not mass-market token trading, but a tightly controlled institutional and private-wealth workflow. That suggests Citi is treating tokenization less as a consumer trading story and more as an upgrade to how wealthy clients and private issuers transact in hard-to-access assets. For RWA builders, that is a useful signal: large banks still appear to favor permissioned distribution, strong identity controls and familiar issuance wrappers over open-access retail models.

Another important detail is what does not change. Citi said issuers keep control over voting and preserve a simpler cap-table structure even as investor reach expands. That addresses one of the core tensions in private-market tokenization. Founders and existing shareholders want broader liquidity, but they do not want a product design that scrambles ownership records or weakens control over who can hold the asset. By separating the tokenized receipt from the underlying share registry, Citi is effectively using tokenization as a distribution and transfer layer rather than as a full legal rewrite of private-company equity. That may prove more scalable in the near term than models that require issuers to move the entire security natively onchain from day one.

The timing is not accidental. Demand for private-market exposure has been rising as companies stay private longer, secondary transactions take on greater importance and investors look for access to late-stage growth companies before any public listing. That backdrop has already produced a wave of tokenized or synthetic pre-IPO products across crypto venues, but many of those offerings have run into the same bottleneck: sourcing real shares, handling transfer restrictions and maintaining institutional-grade trust. Citi’s model does not eliminate those constraints, but it does show how a large balance-sheet institution thinks they can be managed inside a recognizable securities framework.

For the broader RWA stack, the launch is significant because it expands tokenization beyond tokenized cash and government funds into one of the hardest asset classes to operationalize: private-company equity. If the model gains traction, it could give banks, wealth platforms and issuers a clearer template for bringing illiquid securities onchain without relying on loosely standardized structures. The immediate market impact will likely be gradual, because private-share markets remain heavily relationship-driven and legally constrained. But strategically, Citi has put forward a credible thesis: tokenization may not need to replace traditional capital-markets architecture outright if it can embed itself inside the parts of that architecture institutions already trust.