Citigroup Inc (NYSE: C), or Citi, a well-decorated American multinational investment bank, has announced a successful completion of proof-of-concept on private funds tokenization. According to the announcement, Citigroup worked closely with WisdomTree Investment Inc (NYSE: WT) and Wellington Management, with more than $1.4 trillion in assets under management. Notably, the proof-of-concept was conducted on the Avalanche (AVAX) spruce institutional test subnet. The company concluded that the use of novel smart contracts could spur new growth in the investment market, particularly in engaging more investors from around the world.
“We believe blockchain-enabled finance is the future of the industry, and This Proof-of-Concept showcases the ability to explore the transferability of tokenized funds and related compliance in different markets. This will inform future in-production use cases of how blockchain technology and smart contracts can be used in on-chain transactions,” said Maredith Hannon Sapp, Head of Business Development, Digital Assets, at WisdomTree.
The banking behemoth highlighted that it will continue to develop digital assets solutions in a bid to enhance its products in a regulated manner. Moreover, the adoption of blockchain technology, web3 protocols, and digital assets has accelerated in the past few years as demonstrated by notable clear regulatory frameworks.
Market Implications of Citi Tapping into Avalanche Network
According to Mark Garabedian, the Director of Digital Assets Tokenization Strategy at Wellington Management, the Avalanche Spruce test network has proved to be a reliable ecosystem for institutional clients seeking to enter the digital asset space. Similar sentiments were shared by Nisha Surendran, Emerging Solutions Lead for Citi Digital Assets, who added that the testing of Citi asset tokenization on Avalanche will ultimately open up new operating models.
Furthermore, the use of blockchain’s smart contracts has helped increase businesses’ trust and onboard more players from different global markets in the financial sector.
“The growing use of Avalanche by leading financial services firms like Citi, Wellington, WisdomTree, and DTCC Digital Assets continues to cement Avalanche as an institutional blockchain leader,” said Morgan Krupetsky, senior director of business development, institutions and capital markets at Ava Labs.
Following the announcement, Avalanche’s AVAX coin gained around 5 percent on Thursday to trade at about $42. The mid-cap altcoin, with a fully diluted valuation of around $18 billion and a daily average trading volume of about $994 million, has gained more than 130 percent in the past twelve months amid the ongoing altcoin awakening.
According to market data provided by DefiLlama, the Avalanche network has a reported total value locked of around $925 million and a stablecoins market cap of about $1.75 billion. Some of the leading DeFi protocols on the Avalanche network include Benqi, AAVE, and Trader Joe. As a result, the Avalanche network is well-positioned to grow in the confirmed bull market, but some analysts have pointed out its high transaction fees as a major downside.