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Today, Citi announced its latest blockchain proof of concept, which includes the tokenization of private funds within the Avalanche blockchain ecosystem. The tokenized fund is one of Wellington Management’s private equity funds, and WisdomTree and ABN AMRO also participated in the test.
Citi is not the first institution to realize the potential of tokenizing private funds. This is a $10 trillion asset class, and the processes are highly manual and poorly standardized.
In this case, the smart contract encoded the funds distribution rules. Other features trialled included the ability to use fund tokens as ID credentials and collateral for automated loan agreements with DTCC Digital Assets (formerly known as Securrency).
“Smart contracts and blockchain technology enable stronger rule enforcement at the infrastructure level, allowing data and workflows to move with assets,” said Nisha Surendran, Emerging Solutions Lead at Citi Digital Assets. I am. “We believe that by testing the tokenization of private assets, we are exploring the feasibility of opening up new operating models and creating broader market efficiencies.”
ABN AMRO played the role of a traditional investor requesting tokenization. The token was transferred to the virtual WisdomTree client.
The proof of concept was performed on the Avalanche Spruce testnet, a permitted subnet with institutional verifiers. Wellington, T. Rowe Price, WisdomTree, Cumberland, first started using his Spruce testnet early last year. Tokeny, a tokenization company, was involved as ID support and developer of the ERC-3543 tokenization standard.
This is also not Citi’s first experience with Avalanche. Last year, Citi piloted an FX solution in collaboration with T. Rowe Price and Fidelity International. This was part of Singapore’s Project Guardian tokenization trial.
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