Increasing numbers of financial markets actors are planning to use non-central bank digital currency (non-CBDC) in a sign that the rapid convergence of traditional and digital assets is ushering in a new era for the securities industry, according to Citi.
In the bank’s latest Securities Services Evolution whitepaper, Citi said that as distributed ledger technology (DLT) and digital assets become increasingly commercialised, the use of digital money, including tokenised deposits and stablecoins, is on the rise.
The whitepaper reveals that by 2026, 65% of market participants plan to use non-CBDC options for digital securities settlements, marking a significant shift from last year when CBDCs were favored by 52%.
This fourth edition of Citi’s whitepaper series, which surveyed nearly 500 market participants, underscores the growing importance of digital assets and the technologies that support them. The survey included insights from both buy- and sell-side institutions across the globe.
Okan Pekin, head of securities services at Citi, emphasised the transformative potential of DLT and digital assets, particularly as the industry moves towards shorter settlement cycles.
“The move to T+1 has taken centrestage in the post-trade industry over the last few years. Our latest whitepaper focuses on the next frontier for the industry, which is the growing applicability of technologies like DLT and digital assets. The significant potential for tokenisation to scale will continue to transform the securities landscape,” Pekin said.
We expect continued investments in automation, cloud infrastructure, and APIs, as well as solutions that integrate with DLT networks
One of the key findings of the whitepaper is the varied pace of digital adoption across regions. Asia Pacific and Europe are leading the charge, with 48% and 46% of respondents in these regions actively pursuing DLT and digital asset initiatives. In contrast, other regions are progressing more slowly, highlighting the uneven global adoption of these technologies.
Tokenisation, the process of converting assets into digital tokens on a blockchain, is identified as a crucial area of focus. According to the survey, 62% of sell-side respondents are concentrating their DLT efforts on tokenising various asset classes, including both public and private assets. However, native digital issuance—creating entirely new digital assets—remains a longer-term goal, with only 8% of respondents currently focused on this area.
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The survey also found that private networks are the preferred choice for the sell-side, with 64% of respondents expecting to use networks managed by banks, technology companies, and financial market infrastructures (FMIs) as tokenisation gains momentum. Meanwhile, buy-side institutions, such as asset managers, are more interested in public blockchains for fund tokenisation and distribution opportunities.
The transition to T+1 settlement, where trades are settled one day after execution, is another major theme in the whitepaper. The report shows that the impact of T+1 has been more significant than expected, with 44% of respondents citing substantial effects, up from 28% last year. European respondents were particularly affected, with 60% reporting significant disruptions.
Securities lending has been one of the areas most impacted by the T+1 transition, with 50% of respondents indicating challenges in this area, up from 33% the previous year. Additionally, 49% reported increased funding requirements due to the accelerated settlement cycle.
Amit Agarwal, head of custody and securities services at Citi, highlighted the need for modern platforms and real-time data to support the integration of traditional and digital assets. “The accelerating convergence of traditional and digital assets reinforces the need for modern platforms, reliable data, and real-time information. We expect continued investments in automation, cloud infrastructure, and APIs, as well as solutions that integrate with DLT networks,” Agarwal said.
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