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Citi’s Paradigm Shift: Tokenized Deposits vs. Stablecoins like Tether (USDT), USD Coin (USDC), and TrueUSD

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  • Citi introduces “Citi Token Services”, aiming to revolutionize institutional trade and cash movement with tokenized solutions.
  • Collaboration with Maersk sees successful piloting of smart contract-based bank guarantees.

Revolutionizing Global Liquidity Management

Citi recently made waves by launching two transformative digital asset solutions under the moniker “Citi Token Services”. Targeting institutional operations, one service encompasses a pilot for tokenized deposits. This state-of-the-art mechanism empowers organizations with the capability to transfer funds 24/7 between global Citi branches.

In an intriguing development, the second service—a trade solution—saw successful piloting alongside Maersk. Here, smart contracts became the catalyst to initiate instantaneous payments, made feasible through tokenized deposits.

Diving deeper, it’s essential to understand the role of the Regulated Liability Network (RLN). Spearheaded by Citi, RLN is a consortium centered on digital assets, tokenized deposits, and CBDCs (Central Bank Digital Currencies). Yet, it’s pivotal to discern that Citi Token Services operates independently, harmonizing with RLN’s objectives.

As elucidated by Ryan Rugg, Global Head of Digital Assets at Citi Treasury and Trade Solutions,

“Citi Token Services equips corporate treasurers with cutting-edge instruments to govern global liquidity, incorporating just-in-time and programmable facets.”

Further distinguishing its innovative approach, Citi highlights that its framework operates within a permissioned network. This ensures that participating clients remain free from the obligations of hosting blockchain nodes.

On the regulatory front, a significant insight from RLN’s initiatives underscores that existing legal structures are conducive to Distributed Ledger Technology (DLT) adoption. This revelation, however, comes with a stipulation for U.S. banks: securing a non-objection letter from their overseeing regulators is paramount to embark on DLT and digital asset endeavors.

The Wider Blockchain Ecosystem & Citi’s Position

Navigating the broader blockchain environment, it’s evident that multiple strategies are unfurling. These aim to capacitate banks and corporations with the ability to seamlessly manage liquidity and transact funds internationally. For context, JP Morgan’s JPM Coin is a notable parallel, echoing a similar intent.

Both JPM Coin and Citi Token Services predominantly focus on intra-bank money movement. However, each financial behemoth is also actively engaged in more expansive projects targeting interbank transactions. While Citi propels the Regulated Liability Network forward, JP Morgan stands as a founding pillar behind Partior, focusing its energies on cross-border payments.

In this evolving digital era, Citi’s strides signify not just technological progression but also a testament to the banking sector’s commitment to innovation.

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Ralf Klein is a computer engineer specializing in database technology, and as such, he was immediately fascinated by the possibilities of blockchain when he first heard about it, especially since this distributed, tamper-proof technology can be the foundation for much more than just cryptocurrencies. At ETHNews, he translates the articles of his English-speaking colleagues for the German readers. Business Email: info@ethnews.com Phone: +49 160 92211628