Citi Launches Blockchain for Private Startup Shares

Citigroup has introduced Digital Depositary Receipts (DDRs), a novel blockchain-based product enabling institutional and affluent investors to gain exposure to private startup shares. These receipts function as securities issued and safeguarded by Citi, settling on regulated blockchain infrastructure provided by Switzerland's SIX.

The DDR system is designed for adoption by other financial institutions, potentially transforming private market trading dynamics. Historically, depositary receipts allowed foreign stock investment via bank-issued certificates; Citi has now adapted this concept for private markets, recording issuances on the SIX Digital Exchange (SDX) rails.

Investors receive a Citi-issued security instead of direct equity, offering a clearer ownership structure than some existing private market models. Artem Korenyuk, Citi's global lead for digital assets client solutions, described the receipts as a more transparent alternative.

The initial transaction involved Citi wealth clients investing in Kaleido, a tokenization platform supported by Citi Ventures. Currently, access is limited to non-US investors, with transaction and maintenance fees applicable, though US availability is planned for the future. Citi is also reportedly in discussions with major private companies regarding their shares.

This launch extends Citi's May 2025 collaboration with SDX, where the bank serves as a custodian and tokenization agent for late-stage pre-IPO equities. Sygnum and SBI Digital Markets are responsible for distributing these assets to European and Asian clients. The increasing demand for such products is driven by companies delaying public offerings, pushing investors towards alternatives like tokenized shares.

Citi's own research forecasts an eighty-fold increase in tokenization across private markets by 2030. The development is seen as a response to regulatory and legal complexities that have made public offerings less attractive, prompting companies to remain private longer. However, access remains restricted to wealthy and institutional clients rather than retail investors.

Citigroup, alongside other US banks like JPMorgan, is also working on a shared tokenized deposit network anticipated for 2027, further advancing settlement processes. The ultimate success of this initiative in moving beyond pilot stages to widespread adoption will depend on major private issuers authorizing their shares for the program.