Nasdaq Inc. and Citi Treasury and Trade Solutions are partnering to utilize blockchain technology to expand and improve cross-border and private company securities payments on Citigroup's business services platform.
Using distributed ledger technology from Chain Inc., Citigroup will now link business payments to Nasdaq's Linq blockchain for activities such as buying and selling shares of private companies.
The arrangement establishes direct access for the parties to global payments from Nasdaq's Linq by using CitiConnect for Blockchain, and WorldLink Payment Services, which operates as Citi's cross-border, multi-currency service.
The Nasdaq-Citi collaboration comes at a time when the financial services industry is closely studying the use of distributed ledger technology and what type of partnerships or agreements can best speed up its adoption. Blockchain is a distributed ledger system originally developed for use with bitcoin.
The companies say this integration allows businesses to address the challenges of liquidity in private securities by streamlining transactions among multiple parties. It also increases operational efficiency and provides easier reconciliation, as well as real-time visibility of payment transaction activity on the blockchain ledger, according to Nasdaq and Citi.
"This new payment capability marks a milestone in the global financial sector and represents an important moment in the commercial application of blockchain technology," Adena Friedman, CEO of Nasdaq, stated in a May 22 press release. "Through this effective integration of blockchain technology and global financial systems, we can realize greater operational transparency and ease of reconciliation, which can have profound implications for outdated administrative functions in the capital markets."
Two years ago, both Nasdaq and Citi Ventures invested in a funding round for Chain Inc., while also becoming founding members of the IDEO CoLab designed to explore blockchain as an emerging technology.
CitiConnect for Blockchain provides "a crucial bridge between blockchain platforms and Citi's global financial network," Naveed Sultan, Citi's head of Treasury and Trade Solutions Group, said in the release.