Digital Money, including Tokenized Deposits, on the Uptick as Traditional and Digital Assets Converge, Citi Survey Shows
September 04 2024 - 2:00AM
Business Wire
- 65% of respondents in Citi’s latest Securities Services
Whitepaper plan to use non-CBDC options to support digital
securities settlements by 2026
- Regulatory clarity (77%) and Interoperability between networks
and wallets (47%) are the top dependencies in enabling the
widespread use of digital assets
- The T+1 transition is still ongoing with 33% of related project
work still to be undertaken and 95% of respondents expecting to
move away from T+2 settlement within the next five years
With the ongoing commercialization of distributed ledger
technology (DLT) and digital assets, the use of digital money going
beyond central bank digital currencies (CBDCs) is set to
significantly increase, according to Citi’s latest and fourth
edition of its Securities Services Evolution whitepaper series.
65% of respondents plan to use non-CBDC options like
stablecoins, tokenized deposits, money market funds and digital
payment systems to support cash and liquidity requirements for
digital securities settlements by 2026, versus 15% who plan to use
CBDCs. This is a stark contrast to the previous year where CBDCs
were the preferred form of digital money at 52%.
The whitepaper polled close to 500 market participants
encompassing buy- and sell-side institutions and offers timely
insights into the post-trade industry. The whitepaper also
incorporates qualitative insights from 14 financial market
infrastructures (FMIs) and for the first time, includes an in-depth
regional view of the industry across Asia Pacific, Europe, North
America, and Latin America.
Okan Pekin, Head of Securities Services, Citi, said, “The move
to T+1 has taken center stage in the post-trade industry over the
last few years. Our latest whitepaper – the largest since its
inception in 2021 – focuses on the next frontier for the industry
which is the growing applicability of technologies. This includes
distributed ledger technology and digital assets, and the
significant potential for tokenization to scale. These developments
will continue to transform the securities landscape as we continue
to move towards shorter settlement cycles across multiple markets
worldwide. ”
Other notable findings from this year’s whitepaper include:
- Digital adoption is happening at different speeds: Asia
Pacific and Europe are driving the commercialization of DLT and
digital assets with 48% and 46% of respondents respectively
actively pursuing initiatives.
- Tokenization is ready for action while native digital
issuance will take more time: 62% of sell-side respondents are
focusing their DLT and digital asset efforts on tokenization of
various asset classes, including public and private assets, versus
8% for natively digital security issuance.
- Private networks are preferred by the sell-side: 64% of
sell-side respondents expect to use private networks (managed by
banks, technology companies and FMIs) as the tokenization of assets
gain momentum. However, on the buy-side, asset managers are
focusing on public blockchains for fund tokenization and the
distribution opportunities.
On the settlements side:
- T+1 was more impactful than expected: 44% of total
respondents cited significant impact from T+1 going live, higher
than 28% in 2023. Relative to other regions, European respondents
were most impacted with 60% indicating significant impact.
- Securities lending remains one of the most strongly impacted
activities: 50% of respondents (compared to 33% from last year)
saw the most impact on securities lending followed by funding
requirements at 49% (versus 31% last year).
- Changing expectations of accelerated settlements: 40%
expect real-time, atomic settlement within the next decade, with
Asia most bullish at 42%.
“The accelerating convergence of traditional and digital assets
and operating models reinforces the need for modern platforms,
reliable data, and real-time information. We expect to see
continued investments into automation, cloud infrastructure, and
APIs as well as solutions that integrate with DLT networks. In
response to these trends, Citi continues to innovate and leverage
our integrated product offering to serve clients in today’s dynamic
ecosystem,” said Amit Agarwal, Head of Custody, Securities
Services, Citi.
About Citi
Citi is a preeminent banking partner for institutions with
cross-border needs, a global leader in wealth management and a
valued personal bank in its home market of the United States. Citi
does business in more than 180 countries and jurisdictions,
providing corporations, governments, investors, institutions and
individuals with a broad range of financial products and
services.
Additional information may be found at www.citigroup.com
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Harsha Jethnani harsha.jethnani@citi.com +65 93830872
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