Citi survey finds 88% of institutions exploring digital assets, blockchain, DLT – Ledger Insights
Citi Securities Services found that nearly 90% of market participants are actively engaged in or exploring uses for digital assets, blockchain or distributed ledger technology (DLT).
Those actively engaged made up 47% of the respondents compared to 41% in the search phase.
With over $25 trillion in assets under custody, Citi is the fourth largest custodian in the world.
Digital assets are seen as a business opportunity and blockchain and DLT are seen as a way to solve several problems in the securities sector. There is a move towards shortening standard settlement times from two days (T+2) to one (T+1) to reduce counterparty risk. In the US, the SEC started a plan to move towards T+1, and there are similar initiatives in Canada and India.
In last year’s Citi survey, 40% of respondents saw DLT as key to shortening settlement times, but that is now down to 21%, with many believing that DLT has a role but is not essential. Instead, emphasis has been placed on upgrading existing infrastructure.
The ultimate abbreviation is instant or atomic settlement. Seventy-nine percent believe it is achievable within ten years.
DLT is seen as a useful tool for post-trade efficiency, with 54% of respondents envisioning it reducing costs by 10-30%.
Some believe that efficiency gains have far less allure than income opportunities. On that point, 92% see tokenization as a tool to improve liquidity and increase the range of tradable assets.
Divergent views on digital currencies
A dozen financial market infrastructures (FMIs) participated, and they believe digital money is inevitable but likely to happen after 2026 for securities settlement. In contrast, 73% of market participants believe that digital money will be used for settlement by 2026.
The drivers are seen as settlement of digital assets and 24/7 cash movements. The FMIs believe that the digital currency will be a CBDC.
Apart from the FMIs, survey participants include 300 other institutions, including banks (47%), broker-dealers, asset managers, custodians and investors.
Meanwhile, Fidelity Digital Assets also ran an institutional survey, but targeted at a different audience – on the investment side. There was a significant difference in digital asset adoption between Crypto and VC hedge funds and high net worth investors (both notable adopters) versus traditional hedge funds, endowments and pension funds, where adoption was below 10%.
Update: the section on digital currencies was added after publication
