Citi in collaboration with Wellington Management and Wisdomtree Investments has tested the tokenization of private assets using Avalanche Spruce, an Evergreen subnet designed for institutional blockchain deployments, according to an announcement post from Avalanche.
The pilot aims to measure the feasibility of private market tokenization through three key use cases, including the end-to-end transfer of tokenized assets, secondary trading, and applying these digital assets as collateral in lending scenarios, Avalanche noted. Explaining the use of Avalanche Spruce, Citi highlighted in a report that Avalanche delivered the necessary infrastructure for this private, permissioned blockchain test network, ensuring that it could fulfill the customized requirements.
According to the firm, Avalanche infrastructure’s attributes, such as multi-level permissioning, EVM compatibility, and customizability, align with institutional needs and regulatory frameworks. Wellington Management’s Mark Garabedian, Director-Digital Assets & Tokenization Strategy, also noted that the Avalanche infrastructure provided an ideal environment to test blockchain technology’s application to asset management.
Citi’s pilot reveals that tokenization has the potential to revolutionize traditional markets by unlocking new value, automating processes, and creating more efficient and transparent systems. By tokenizing private funds, Citi is demonstrating its recognition of the significant efficiency gains and accessibility that digitization can offer, compared with the state of private markets today, which are often fragmented and operationally complex despite being worth over $10 trillion.
With the proof-of-concept showing the benefits of private market tokenization, Citi plans to move forward with several key priorities. The firm expects to bring private markets onto digital networks to increase transparency, liquidity, and accessibility, potentially unlocking new opportunities for investors and asset owners.