Citibank used Avalanche to explore private equity fund tokens
Citibank, Wellington Management and Wisdomtree explore private equity tokens on Avalanche. The proof of concept demonstrates the potential for improved automation, compliance and control. Collaborating with DTCC's digital assets will ensure interoperability and seamless integration.
Citibank has partnered with Wellington Management and Wisdomtree to launch a private equity fund tokenization using the Avalanche blockchain platform.
This innovative initiative aims to transform capital markets by using blockchain technology to improve operational efficiency and explore new operating models.
Avalanche Spruce Subnet
The proof of concept conducted by Citibank, Wellington Management and Wisdomtree was facilitated through the Avalanche Spruce Institutional Test Subnet. This unique network environment provides an ideal sandbox for testing private funds' tokens, providing scalability, efficiency and regulatory compliance. Spruce's subnet infrastructure enables seamless experimentation with modern contract capabilities, paving the way for new functionality and operational efficiencies previously unattainable with traditional assets.
The roughly $10 trillion private markets have long struggled with complex infrastructure, lack of standardization and transparency. The use of Avalanche's Spruce Subnet addresses these challenges, providing a secure and efficient platform for simulating private equity funds. By transforming underlying fund distribution rules into smart contracts and embedding them into tokens that are distributed to investors, issuers, and distributors, the proof-of-concept demonstrated greater automation, improved compliance, and improved regulatory environments.
Enable seamless integration and interoperability
Experiments with tokenized private assets also came from DTCC Digital Assets, formerly known as Securrency, to evaluate multiple transfer scenarios using smart contracts. This collaboration highlights the need for seamless integration and interoperability between blockchain-based solutions and existing financial infrastructure. Using artificial identity credentials provided by Wisdomtree and using private fund tokens as collateral for automated loan contracts, Citibank explored the technical, legal and operational frameworks needed to migrate traditional assets to a digital platform.
The successful completion of the proof of concept is a major milestone in the journey towards mainstream adoption of blockchain technology in the financial industry. According to Nisha Surendran, Emerging Solutions for CT Digital Assets Leader, highlighted, smart contracts and blockchain technology have the potential to enable improved regulatory enforcement at the infrastructure level, facilitating seamless data and workflow management. This exploration of tokenized private assets represents a critical step in opening up new operating models and creating efficiencies for the wider market.
Mark Garabedian, director of digital assets and tokenization strategy at Wellington Management, praised the technical sandbox environment provided by the Avalanche Spruce test network, highlighting the collaboration between partners and the potential of blockchain technology in the industry. Similarly, Mardit Hannon Sapp, Business Development, Digital Assets, at Wisdomtree, emphasized the potential of blockchain-enabled financial futures and the proof of concept role in exploring tokenized fund transfer and compliance in various markets.
Citibank's ongoing commitment to developing digital asset solutions reflects its commitment to innovation and enhancing its products and services across various financial sectors. By partnering with industry partners and leveraging cutting-edge blockchain technology, Citi continues to pave the way for the future of finance.
