Citi has begun using Swift’s new distributed ledger to enable its tokenized deposits to function beyond its own network of branches and clients. The New York-based bank started leveraging the blockchain this week, marking a step toward making these digital assets usable across different financial institutions.
Expanding Tokenized Deposits Beyond One Bank
Citi introduced Citi Token Services two years ago, a service that allows near-instant movement of tokenized deposits across accounts within Citi’s network at any time, including after hours and on weekends. The service was recognized as one of American Banker’s 2025 Innovations of the Year.
However, tokenized deposits typically work only on a bank’s proprietary ledger, limiting their use when payments need to cross to another bank. As Harvey Li, founder of consultancy Tokenization Insight, noted in a LinkedIn post, “A tokenized deposit works most easily when payer and beneficiary are customers of the same bank.” He added that once money needs to move to another bank, the proprietary ledger becomes a limitation because each institution maintains its own deposit liability, technology stack, compliance perimeter, and settlement relationships.
Swift's Network as a Solution
Swift, which has 11,500 bank and securities firm members across 200 countries, provides a messaging network that can coordinate activity across bank-owned ledgers. By using Swift’s blockchain, Citi can connect its tokenized deposits with other banks without building bilateral connections or persuading counterparties to join its own network.
Li explained, “Swift can make separate systems interoperable; institutions such as Citi can make that interoperability commercially useful. Together, they point toward a two-tier hub-and-spoke architecture — effectively a hub of hubs.”
Swift's Blockchain Development
Swift first announced its permissioned blockchain network in September, which runs on a layer-two protocol compatible with ethereum’s blockchain and was developed with Consensys. In July, Swift announced the network was ready. Citi was among an initial group of 17 banks supporting it, including BNY, Wells Fargo, HSBC, Standard Chartered, ANZ, BNP Paribas, DBS, First Abu Dhabi Bank, FirstRand Bank, Itaú Unibanco, Lloyds Bank, Mashreq, MUFG Bank, OCBC, UBS, and UOB.
Debopama Sen, global head of payments at Citi, told American Banker that the one-year turnaround from announcement to use “is a good indication that it hasn’t taken that long, and it integrates well with our Citi Token Services.”
Integration and Adoption Challenges
Swift’s blockchain uses the same standards and structured data as its traditional network, which Sen said “will make it easier for the larger community of banks to adopt it.” Since Citi is already a high-volume user of Swift’s traditional network and already offers tokenized deposits, connecting to the distributed ledger was not a heavy lift.
Sen noted, “The technology exists today; the technology is the easy part. Even the integration is not that hard if you have a level of sophistication, security and experience. But I think the real test is how do you get network adoption and Swift has that network effect, so I can go bilaterally and tie up with all my counterparties and big banks.”
Advantages and Ongoing Operations
Swift’s large user base gives it a significant network advantage. Its traditional messaging system uses a correspondent banking model, where payments may pass through multiple banks, which has been criticized for delays and lack of visibility. Swift has addressed this with a dashboard showing payment progress and reports that 75% of payments reach their destination within 10 minutes.
Sen highlighted that Swift’s new blockchain provides immutable payment messaging and benefits from years of experience in handling challenges. She noted that Citi has already conducted multiple transactions with other banks in other countries and is preparing for more.
“This is obviously a pilot stage, but the whole point of the pilot stage is to get everybody used to the system so that we can ramp it up,” Sen said. “The adoption is more likely if it is interoperable with fiat and with everything else.”
Other Blockchain Payment Initiatives
Other bank consortia are also exploring blockchain-based payments, including Open Standard, the Faro banking consortium, and the BankChain Alliance. The Clearinghouse is working on clearing and settlement of tokenized deposits. Sen said some of these efforts are still exploratory, and Citi aims to offer clients multiple options.
“We do see a world where clients will need multiple options, but again, interoperability between these options is very important,” Sen said. If a client needs Citi to use the Swift ledger for some business models and a stablecoin or tokenized deposit for others, the bank wants to support all of them.
Handling 24/7 Payment Risks
Instant settlement outside business hours introduces new fraud risks, but Sen said Citi has operated around the clock for years. Citi Payments Express, announced a few years ago, now operates in more than 20 markets. Sen noted, “We do close to 10 million transactions a day, and a large part of that happens after hours because these are supporting e-commerce business models.”
She emphasized the need for robust risk management and automation: “It is a 24/7 world, so your risk management has to keep up, but you have to have a high level of automation to be able to deliver that and flexible scale.”
Future Outlook
Swift’s blockchain ledger and its traditional network will likely run concurrently for some time. Sen envisions a future where more banks use the ledger, enabling faster payment settlements at a much higher scale, but acknowledged, “I think it’s going to be a journey.”
