Tokenization of Private Markets Using Distributed Ledger Technology

This technical report discusses the tokenization of private markets through the application of distributed ledger technology (DLT). It outlines the potential benefits of utilizing DLT, such as improved operational efficiencies, enhanced product capabilities, and better distribution of investment products. The report emphasizes the importance of creating a digital infrastructure that supports the seamless transition of traditional assets to digital networks. It details a proof-of-concept conducted by Citi in collaboration with Wellington Management and WisdomTree, which tested the tokenization of a private equity fund. The report highlights the operational challenges and costs associated with transitioning to a digital framework, including the need for compliance and interoperability mechanisms. Additionally, it presents various use cases tested during the proof-of-concept, illustrating how tokenized assets can automate operations and facilitate new financial models. The findings indicate that while challenges remain, tokenization could significantly enhance accessibility and efficiency in private markets.