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The Future of Digital Securities: Insights from Citi’s Latest Whitepaper

LONDON–With the ongoing advancement in distributed ledger technology (DLT) and the growing prominence of digital assets, the landscape for digital money, extending beyond central bank digital currencies (CBDCs), is poised for substantial evolution. This is one of the key takeaways from Citi’s recent fourth edition of its Securities Services Evolution whitepaper series.

A significant 65% of market participants surveyed anticipate utilizing non-CBDC solutions—such as stablecoins, tokenized deposits, money market funds, and digital payment systems—for meeting cash and liquidity requirements related to digital securities settlements by the year 2026. This marks a notable shift from the previous year when 52% favored CBDCs.

The whitepaper, which collected responses from nearly 500 market stakeholders including both buy-side and sell-side institutions, offers critical insights into the practices shaping the post-trade industry. For the first time, it also presents a detailed regional analysis, focusing on Asia Pacific, Europe, North America, and Latin America, bolstered by qualitative data from 14 financial market infrastructures (FMIs).

According to Okan Pekin, Head of Securities Services at Citi, “The transition to T+1 settlement has emerged as a focal point within the post-trade industry over recent years. This latest whitepaper, which is the most extensive since the series began in 2021, emphasizes the industry’s next steps, particularly concerning the expanding application of technologies such as DLT and digital assets, and the potential for tokenization to scale. These advancements will reshape the securities sector, pushing towards quicker settlement cycles across global markets.”

Key Findings from the Whitepaper

Some of the most notable findings from this year’s analysis include:

1. Varied Adoption Rates of Digital Technologies

The pace of digital adoption differs widely by region, with Asia Pacific and Europe leading the charge. According to the findings, 48% of respondents from Asia Pacific and 46% from Europe report active engagement in DLT and digital asset initiatives.

2. Focus on Tokenization

A significant 62% of sell-side respondents are prioritizing their DLT efforts on the tokenization of various asset classes—both public and private. In contrast, only 8% focus on the issuance of securities that are inherently digital.

3. Preference for Private Networks

When it comes to asset tokenization, a majority of sell-side respondents (64%) indicate a preference for utilizing private networks operated by banks, technology firms, and FMIs. Conversely, buy-side asset managers are increasingly leaning towards public blockchains for fund tokenization and distribution strategies.

Settlements and Changing Expectations

From the settlements perspective, the shift to T+1 has had a more considerable impact than anticipated. Notably, 44% of total respondents reported significant effects from the T+1 transition, a significant increase from 28% the previous year. European participants were particularly affected, with 60% noting substantial changes.

Securities lending has also been notably influenced, with 50% of respondents acknowledging its significant impact, up from 33% last year. Additionally, there is a shift in expectations surrounding accelerated settlements, with 40% predicting the implementation of real-time, atomic settlement within the next ten years, especially among participants from Asia who show the most optimism at 42%.

As traditional and digital asset operating models converge, there is a growing need for contemporary platforms, reliable data, and real-time information. This trend suggests ongoing investments in automation, cloud infrastructure, and APIs that work seamlessly with DLT networks. Amit Agarwal, Head of Custody for Citi’s Securities Services, stated, “Citi continues to innovate and leverage our integrated product offerings to meet client needs in today’s evolving landscape.”

About Citi

Citi stands as a leading banking partner for institutions engaged in cross-border operations, a global force in wealth management, and a respected personal bank in the United States. Operating in over 180 countries and jurisdictions, Citi delivers a broad array of financial products and services to corporations, governments, investors, institutions, and individual clients.

For more information, visit www.citigroup.com or follow them on social media platforms like @Citi or LinkedIn.

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