Citi’s latest industry survey suggests tokenized collateral has crossed the line from pilot project to practical reality, with more than three-quarters of financial institutions expecting to deploy digital collateral in some form during 2026.
The bank’s Sept. 24 report, Digital Collateral: A Practical Reality, prepared together with research firm The ValueExchange, finds that 77% of surveyed institutions expect to use some form of tokenized collateral during 2026. The figure marks a sharp step up from earlier industry polling, which had placed the share of institutions planning to actively manage tokenized collateral at 52%.
The report examines tokenized cash, money market funds, government bonds and other assets used for margin and financing. Its central conclusion is that banks and market operators are moving beyond sandbox testing and into live production environments for blockchain-based settlement.
The 346 million USD problem tokenization aims to solve
Citi frames the shift against a costly structural inefficiency in traditional finance. Systemically important financial institutions manage an average of roughly 74 billion USD in collateral each day, spread across approximately 65 custody locations, according to the report’s findings.
Because settlement hours, fragmented systems and outdated cutoffs restrict when assets can move, about 25% of that collateral remains idle or unremunerated. At a large institution, the idle balance can reach around 15 billion USD. Citi estimates that inefficient collateral deployment costs a Tier 1 institution roughly 346 million USD per year in foregone earnings.
Christopher Perkins, president of CoinFund and a former Citi derivatives executive, called the report a landmark for the asset class. “Collateral is one of the very best use cases for tokenized products,” Perkins wrote on X. “It’s the only time in my career where there is an opportunity to lower collateral and lower risk.”
Tokenized repo is already processing trillions
Repurchase agreements have emerged as the most developed institutional application of blockchain-based collateral. Citi’s report estimates that roughly 5% of monthly repo volume is already transacted in tokenized form.
Production data backs that up. Broadridge said its Distributed Ledger Repo platform processed 8 trillion USD in volume during July alone, with average daily volume of 365 billion USD. The platform lets firms settle repo transactions and move tokenized collateral without replacing their existing trading systems.
The report also highlights a yield dimension: around 60% of global margin is currently held in non-yielding cash. Tokenized money market funds could combine yield with 24/7 transferability, allowing collateral to remain invested until the moment it must be moved. JPMorgan’s filed OnChain Liquidity-Token Money Market Fund, which holds cash, short-term U.S. government securities and collateralized repos, is cited as an early regulated example of the structure.
DTCC prepares October launch for tokenized securities
U.S. Treasury securities form the next frontier. The Depository Trust & Clearing Corporation plans to launch its DTC Tokenization Service in October 2026 after completing live production trades. The service will allow eligible securities held at DTC to be represented in tokenized form while retaining their existing ownership rights and investor protections.
For crypto-native markets, the institutional embrace of tokenized collateral closes a long-running loop. The same tokenized cash-legs, money market funds and Treasuries that DeFi protocols have used as base assets are now being adopted by the custodians and clearing houses that once dismissed blockchain settlement as speculative infrastructure.
What it means for the market
The collateral use case matters because it targets a genuine cost center rather than a hypothetical efficiency. If even a fraction of the idle 25% of institutional collateral becomes mobile through tokenization, the demand for tokenized cash equivalents and government securities — the same assets backing major stablecoins and tokenized fund products — grows accordingly.
Citi’s data point that 77% of institutions expect deployment in 2026 suggests the transition is no longer optional experimentation. With DTCC’s service launching next month and tokenized repo already clearing hundreds of billions daily, digital collateral has moved from whitepaper to balance sheet.
Market snapshot at the time of writing (Sept. 27, 12:00 UTC): BTC trades at 84,883 USD (+0.86% in 24h, market cap 1.71 trillion USD), ETH at 2,709.85 USD (+0.77%, market cap 330.8 billion USD), and SOL at 124.04 USD (+2.26%, market cap 72.9 billion USD), with the Crypto Fear & Greed Index at 70, signaling Greed.
65 custody locations per institution is the stat i cant get past. half the idle problem is banks simply not knowing what they own where after the cutoffs hit
the jump from 52% to 77% in one survey cycle is the real story. institutions dont shift plans that fast unless something already changed internally
Agreed. A Sept 24 report titled Digital Collateral A Practical Reality reads like the pilots already worked.
went from 52% to 77% in one survey cycle? either adoption is genuinely accelerating or institutions just tell surveys whatever sounds progressive
surveys always overstate intent but even if half the 77% actually ships something this year thats still a huge jump from the old polling
77% of institutions jumping from 52% in a single survey cycle is wild. either the pilots actually worked or every bank just answered with what they wanted to be true
The 346 million USD a year figure is the number that matters here. Banks do not rewire plumbing for ideology, they do it when idle assets cost real money.
the 346M is just the measurable part too. 65 custody locations per institution means armies of staff reconciling positions every morning, and that cost never shows up in any survey line item
tokenized money market funds as margin is the sleeper part of this report. everyone obsesses over the bonds angle instead
the MMF point is underrated. and its the only part that actually fixes the 74 billion a day sitting across 65 custody locations problem, bonds settle way slower than funds move
25% of 74 billion a day idle is over 18 billion doing nothing. even shaving a fifth off that pays for the entire tokenization build within a month
the MMF point is underrated. and its the only part that actually fixes the 74 billion a day sitting across 65 custody locations problem, bonds settle way slower than funds move
this. same-day margin on tokenized MMFs is the entire pitch, the bonds angle is just the headline everyone quotes