Private Shares Face Citi’s Tokenized Bank Receipt Test

Citigroup has started turning private company shares into bank-issued blockchain receipts, with Kaleido as the first transaction tied to the new structure.

That matters because Citi isn't pitching this as a crypto wrapper for speculative trading. It is adapting an old capital markets instrument, the depositary receipt, for private company equity and recording it on blockchain infrastructure operated by SIX, according to CoinDesk. The product is called Digital Depositary Receipts, and Citi says it gives wealthy and institutional investors exposure to private company shares through securities issued and held by the bank.

“Our focus with Digital Depositary Receipts is to continue to expand responsible access to digital asset markets,” a Citi spokesperson told CoinDesk.

The phrase “responsible access” is doing a lot of work. Tokenization can make private market exposure easier to package and record. It does not make private company equity behave like a liquid public stock. Liquidity, valuation, disclosures, transfer limits, and regulation still decide whether the product becomes useful at scale.

Why Citi’s private-share token matters now

Private company equity has long been awkward for investors who aren't already inside the right networks. Access tends to be limited, transfers can be slow, and exposure often comes through structures that add layers between the investor and the company.

Citi’s move points to a different model: keep the familiar bank-issued security, but shift the recordkeeping and settlement layer onto blockchain rails. That could help private market exposure look more like a standardized financial product, rather than a one-off negotiated position.

This follows a broader institutional push into tokenized assets. Citi has also joined several of the largest U.S. banks in plans to develop a shared tokenized deposit network through The Clearing House by mid-2027, CoinDesk reported. That system would convert traditional bank deposits into blockchain-based tokens while keeping funds inside the regulated banking system.

For readers tracking the same arc, XOOMAR has covered Citi’s move in Citigroup Bets Tokenized Receipts Crack Private Markets, the wider tokenized-equity thesis in 2% Tokenized Stocks Bet Could Hand Crypto a $5T Prize, and AI-driven ETF tokenization.

What are Citi’s Digital Depositary Receipts?

A Digital Depositary Receipt is Citi’s blockchain-based version of a depositary receipt tied to private company shares.

Traditional depositary receipts let investors gain exposure to shares through a bank-issued security, rather than directly holding the underlying stock. Citi is applying that model to private companies. Investors own the receipt. Citi acts as issuer and custodian. The underlying private company equity sits behind the receipt.

Here is the cleanest comparison:

Tokenization changes the record. It can put ownership claims and transfers onto a blockchain-based system instead of relying only on conventional ledgers and manual back-office work.

It does not change the underlying asset. The thing behind the receipt is still private company equity, with all the limits that implies.

How Citi’s structure connects investors to private companies

The product debuted with a transaction involving Kaleido, a digital asset and tokenization company backed by Citi Ventures and investors in Citi’s wealth management business.

The structure works by placing a private company equity interest behind a receipt. Investors buy the bank-issued receipt, while Citi holds and administers the structure as issuer and custodian. PYMNTS, citing Citi’s release, said Citi is collaborating with SIX, described as a fully regulated digital central securities depositary, and that Citi will be responsible for settlement and safekeeping of the tokenized depositary receipts.

That gives Citi two roles at once. It is not just providing the digital wrapper. It is also standing in the middle as a regulated financial institution responsible for the product’s custody and issuance mechanics.

Bis Chatterjee, head of partnerships and innovation, services at Citi, framed the product as a way to bring traditional market discipline into digital asset infrastructure:

“Our Digital Depositary Receipts product is designed to provide superior client service, safeguard assets and facilitate capital markets activity with the same rigor that underpins traditional financial markets,” Chatterjee said, according to PYMNTS.

XOOMAR analysis: the key design choice is not “blockchain versus no blockchain.” It is Citi using blockchain while preserving the bank-controlled receipt structure. That makes the product more palatable for institutions that want digital settlement benefits without abandoning familiar legal and custody arrangements.

What a tokenized private-share receipt could look like in a portfolio

Take the basic example implied by Citi’s launch: an eligible wealthy or institutional investor wants exposure to a private technology company but cannot buy its shares through ordinary public-market channels.

Under Citi’s model, the investor would hold a Digital Depositary Receipt linked to that private company’s equity. The investor’s position would be recorded through the blockchain-based infrastructure used for the receipt, while Citi would remain the issuer and custodian.

That can simplify the wrapper. Instead of negotiating a direct private share purchase or entering a more complex intermediary structure, the investor owns a bank-issued instrument designed to represent the exposure.

But the practical limits remain. The source material does not specify trading windows, transfer mechanics, onboarding requirements, lockups, pricing methodology, or disclosure obligations for these receipts. Those omissions matter.

A cleaner record does not guarantee an easy exit. A tokenized receipt can be easier to administer, but the underlying exposure is still tied to a private company. Private company shares can be difficult to value, and investors may receive less frequent or less detailed information than they would with public equities.

The risks that could keep tokenization from solving private markets

Citi argues the approach could make private-market investing simpler and more transparent than structures that rely on special-purpose vehicles and multiple intermediaries. That is plausible. Fewer layers can mean fewer reconciliation problems and cleaner administration.

Still, the risk stack is not eliminated. It changes shape.

• Liquidity: A blockchain record only helps transferability if the product has permitted buyers, workable settlement processes, and legal paths for transfers.
• Valuation: Private companies do not trade continuously on public exchanges, so pricing can remain uncertain even if the receipt itself is digitally recorded.
• Disclosure: Investors may not get public-company reporting depth or frequency.
• Technology: Custody, infrastructure resilience, data privacy, and operational controls have to meet bank-grade expectations.
• Regulation: Citi has described the product in terms of responsible access, and PYMNTS reported the bank is preserving the structures and protections clients expect. The exact limits of access are not detailed in the source material.

This is where the hype around tokenized securities often runs ahead of the plumbing. Blockchain can improve settlement and records. It cannot manufacture disclosure, liquidity, or regulatory permission by itself.

If Citi expands beyond SIX, the model gets more interesting

For now, Citi’s private-share product runs on infrastructure provided by SIX. The bank said it plans to expand the offering over time and eventually support public blockchain networks, according to CoinDesk.

That is the watch point. A bank-controlled product on regulated infrastructure is one thing. A product that can operate across other financial market infrastructures and blockchain networks would test whether tokenized private-market exposure can move beyond bespoke institutional pilots.

Deborah Querub, head of digital assets for Wealth at Citi, said the bank is focused on expanding access while preserving expected client protections:

“We’re focused on responsibly expanding access to new types of investment opportunities while preserving the structures, protections and experience our clients expect,” she said, according to PYMNTS.

The breakthrough, if it comes, won’t be the token. It will be whether Citi and peers can make private market exposure easier to hold, track, settle, and distribute without pretending private company equity has become public-market liquid.

For investors, the practical read is simple: watch the next issuers, the transfer rules, the venues Citi supports, and whether public blockchain access actually arrives. That will show whether Digital Depositary Receipts are a useful bridge into private markets or just another well-packaged institutional experiment.

Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.

The Bottom Line

• Citi is bringing a familiar capital markets structure into tokenized private equity.
• The product could make private-market exposure easier to package for institutional investors.
• Liquidity, valuation, disclosure, transfer limits, and regulation remain major constraints.