Can Private Market Liquidity Expand on Blockchain? Citigroup's 'Unlisted Tokenized Depositary Receipt' [Crypto Briefing]

[Financial News] Citigroup, a global financial institution, has unveiled a digital depositary receipt (DDR) that tokenizes equity in unlisted companies. The structure allows a major financial institution to issue tokenized depositary receipts backed by private-company shares and also handle custody. It is drawing attention as an alternative that could reduce the complexity and opaque costs of private market transactions.
According to foreign media and industry sources on the 15th, Citigroup has begun the first transaction involving a DDR product representing equity in an unlisted company. The underlying asset is a stake in Kaleido, a portfolio company of Citigroup and an institutional tokenization and digital asset platform. The first transaction took place between Kaleido and a client of Citi Wealth, Citigroup's asset management arm. The service is reportedly being offered to investors outside the United States.
The product is notable for placing unlisted-company equity into a traditional depositary receipt structure and tokenizing it on blockchain infrastructure. Tokenization and recordkeeping take place on a regulated blockchain infrastructure operated by SIX Group in Switzerland. Citigroup is responsible for settlement and safekeeping of the tokenized depositary receipts on the platform.
Citigroup's move to launch a tokenized product for private-company equity comes amid a private market environment in which the time required to reach an initial public offering is getting longer. As unlisted companies seek pre-listing liquidity and broader investor access, the existing secondary market for private shares has remained structurally complex. It has also faced criticism for having too many intermediaries and, in some cases, unclear costs.
Through the DDR structure, Citigroup plans to offer a more direct approach for issuers and investors. The bank said that having a single financial institution handle both issuance and custody could reduce complexity and hidden costs.
For unlisted companies as issuers, the structure could make share transfers and circulation more efficient without going through a listing process or changing the ownership structure of the underlying equity. In particular, it is seen as an advantage that they can broaden their investor base while maintaining control over voting rights and equity structure management. Investors, meanwhile, can gain access to private-company equity through a depositary receipt structure already used in traditional financial markets.
Citigroup said it is considering expanding the use of DDRs in the future across digital financial infrastructure, traditional financial infrastructure, and multiple blockchain networks.
Citigroup's DDR launch is expected to serve as a benchmark for South Korea's token securities (STO) and fractional investment industries, where institutionalization discussions are under way. Industry observers say the model shows how a global major institution has turned token securities infrastructure into a product structure aimed at private markets. In particular, they note that having a single entity handle both issuance and custody could improve the practical viability of tokenization for unlisted assets with complex rights relationships.
In South Korea, discussions are also continuing on expanding the scope of token securities to include unlisted companies, intellectual property (IP), and corporate finance assets. In such cases, clarity in rights relationships, reliability of custody structures, and transparency in share transfer and circulation procedures are seen as key issues. An industry source said, "The competitiveness of issuers and securities firms depends not only on finding underlying assets, but also on how precisely they design systems for rights recording, profit distribution, and investor protection."
elikim@fnnews.com Kim Mi-hee Reporter