Citigroup Introduces Tokenized Deposits in Japan, First for Foreign Firms

Citigroup Enters Japan

It has been revealed that Citigroup, the American banking giant, will launch a remittance service for Japanese companies using "tokenized deposits" based on blockchain technology within this year. Shamil Khairek, the global head of Citigroup's service division, disclosed this in an interview with the Nikkei.

Tokenized deposits are a next-generation payment technology that replaces bank deposits with a digital format that can be moved on the blockchain, allowing for transactions using existing banking systems.

According to Citigroup, this will be the first time a foreign financial institution offers tokenized deposit services to Japanese companies, enabling them to instantly remit foreign currency even during nights and holidays between Citigroup's locations in the U.S., U.K., Singapore, Hong Kong, and Ireland. The process can be completed simply by selecting the "Use Token Service" option on the remittance instruction screen, with all administrative and risk management handled by Citigroup.

Citigroup is a major financial institution that moves approximately $6 trillion in funds daily, with remittances via tokenized deposits alone reaching $1 billion per day. Traditional overseas remittances are constrained by bank business days, causing delays in receiving funds on the next business day if the recipient country has a holiday, necessitating advance remittances and standby funds. However, with tokenized deposits, payments can be delayed until just before they are due.

Citigroup views Japan as one of its five major global markets, and Khairek stated that their entry into Japan and other regions allows them to comprehensively cover key hubs in the Asia-Pacific. In the future, they aim to establish a system that allows deposits to be exchanged with banks other than Citigroup, advancing infrastructure development with SWIFT, which handles interbank communications, and The Clearing House, which supports U.S. payment infrastructure.

Domestic Demonstrations Underway

Efforts surrounding tokenized deposits are also progressing within Japan, with three companies—DCP, GMO Aozora Net Bank, and ABeam Consulting—announcing at the end of August that 43 companies participated in the Financial Services Agency's "FinTech Proof of Concept Hub" support project for "Interbank Settlement of Tokenized Deposits."