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In a significant move, prominent US banking powerhouse Citigroup has inaugurated its venture into the burgeoning realms of cryptocurrencies and blockchain, unveiling a novel token service. This initiative, aimed at leveraging the potential of distributed ledger technology (DLT), seeks to enhance the bank’s service portfolio.

The freshly minted Citi Token Services is geared towards institutional clientele, converting client deposits into digital tokens which can facilitate immediate global transfers, as delineated in a press release on Monday.

Distinguished from public blockchains, the backbone of this service is a blockchain that will be exclusively managed and operated by Citigroup.

Shahmir Khaliq, the Global Head of Services at Citigroup, remarked, “The emergence of Citi Token Services marks a pivotal milestone in our quest to present our institutional clientele with real-time, uninterrupted, advanced transactional banking solutions.”

Skepticism Among Crypto Enthusiasts

While this fresh incorporation of a private blockchain initiative highlights the robust application of DLT, it might not resonate well with a section of the crypto enthusiasts.

The pivotal philosophy fueling the inception and popularity of leading cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) revolves around the principles of being 1) public and permissionless, 2) transparent with open-source protocols, and 3) decentralized.

Contrastingly, Citigroup’s private blockchain, forming the nucleus of their new token service, seems to diverge from these foundational attributes of the crypto sector.

Furthermore, the surge of private blockchains spearheaded by banking giants like Citigroup might potentially attenuate the demand for public blockchains over time, veering away from the cardinal values revered in the crypto space.

Unwavering Growth in Institutional Involvement

Despite potential criticism from crypto purists, Citigroup’s venture aligns with a discernible trend in the conventional finance sector, where substantial entities are gradually pivoting towards either adopting cryptocurrencies or integrating the underlying technology.

In a similar vein, Deutsche Bank recently disclosed its collaboration with Taurus, a digital asset custody enterprise, to develop tokenization and digital asset custodial services.

Simultaneously, since the onset of June, numerous heavyweight asset managers such as BlackRock, Fidelity, and Vanguard have been initiating processes to establish spot Bitcoin Exchange Traded Funds (ETFs). This move promises to diminish entry barriers for conventional investors aspiring to allocate a segment of their investments to cryptocurrencies.

Furthermore, PayPal is orchestrating strategies to launch a stablecoin anchored to the US dollar, dubbed PayPal USD (PYUSD), envisioning it as a substantial gateway to introduce cryptocurrencies to both consumers and commercial entities.