Citi: 77% of Financial Institutions Pivot to Tokenized Collateral

A report published September 24 by Citi, in collaboration with The ValueExchange, highlights a shift from experimental pilot programs to practical, live-environment applications. Currently, Tier 1 institutions manage roughly $74 billion in collateral daily across 65 custody locations. Due to rigid settlement windows and outdated infrastructure, approximately 25% of these assets remain stagnant, costing large firms an estimated $346 million in annual lost earnings.

Tokenization offers a solution to this "idle balance" problem by enabling near-continuous asset movement. By utilizing digital versions of cash, money market funds, and U.S. Treasuries, firms can bypass conventional banking hours and reduce the need for large, non-yielding liquidity buffers. Market progress is already visible: Broadridge’s distributed-ledger repo platform processed $8 trillion in volume during July alone. Furthermore, the Depository Trust & Clearing Corporation (DTCC) is set to launch its tokenization service in October, following successful production trials involving major entities like BlackRock, JPMorgan, and Goldman Sachs. While legal and legacy system hurdles persist, the financial sector is rapidly moving toward an automated, 24/7 collateral framework.