CitiBank, one of the biggest banks globally, has done a test run showing how a private equity fund can be turned into tokens using the Avalanche blockchain. They used Avalanche’s Layer 1 Spruce subnet for this.
This is a big deal because it could make more financial companies, especially those on Wall Street, start using blockchain technology faster.
CitiBank’s Project Guardian and Avalanche Integration
CitiBank, in partnership with the Monetary Authority of Singapore (MAS) and the financial sector, ran a trial on the Avalanche blockchain as part of Project Guardian, aiming to explore blockchain uses in finance.
Their simulation focused on a Request for Streaming (RFS) application for practice spot FX trading of the USD/SGD currency pair. While still in the testing phase and not open to clients, Avalanche Network’s announcement hints at wider applications beyond currency trading.
The trial showcased Evergreens, a part of Citi’s Project Guardian, which utilized Avalanche’s built-in interoperability feature. This feature, powered by Avalanche’s Warp Messaging (AWM), allows smooth communication between various blockchain networks without third-party bridges or trust assumptions.
Avalanche’s Appeal for Financial Institutions: John Wu, President of Ava Labs, expressed excitement about major financial institutions using Avalanche to develop innovative solutions for foreign exchange and broader capital markets. Wu emphasized Avalanche’s speed, scalability, and customizability, making it ideal for building on-chain applications to meet institutional needs.
Potential for Blockchain Adoption: Puneet Singhvi, Managing Director and Head of Digital Assets for CitiBank’s Institutional Clients Group, mentioned in an interview that such simulations could help financial institutions embrace blockchain technology while complying with regulations.
CitiBank’s Exploration of Blockchain Services
According to a Bloomberg report, Citi is set to assess the results of the simulation to determine its potential offerings in blockchain-based services. This evaluation is expected to conclude in the coming weeks.
After introducing a digital asset service for institutional clients in September, CitiBank conducted a test where they turned a hypothetical private equity fund into digital tokens using Avalanche’s blockchain technology. This allowed for automatic splitting and transferring of tokens to simulated WisdomTree financial services clients based on preset rules.
Furthermore, they explored using these tokens as collateral in automated lending contracts with Depository Trust & Clearing Corp.’s digital assets unit. Puneet Singhvi highlighted the potential of this approach, showing how blockchain technology can be used in various financial applications.
CitiBank’s successful test on Avalanche shows how blockchain can transform the financial industry by enabling new and innovative solutions.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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