Major US investment banking conglomerate Citigroup has made its first major foray into the world of crypto and blockchains with the launch of a new token service, as the bank looks to leverage distributed ledger technology (DLT) to improve its product offerings.

Citigroup’s new Citi Token Services is a tokenization service for institutional clients – customer’s deposits are transformed into digital tokens that can be sent around the world instantly, the bank explained in a statement on Monday.

Citi Token Services relies on a blockchain that will be privately owned and managed by Citigroup themselves, rather than on a public blockchain.

“The development of Citi Token Services is part of our journey to deliver real-time, always-on, next-generation transaction banking services to our institutional clients,” said Shahmir Khaliq, Citigroup’s Global Head of Services.

Citigroup’s New Blockchain Won’t Excite Crypto Purists

While Citigroup’s introduction of its new private blockchain-powered solution for institutional clients is another demonstration of the strong use case of DLT, it will do little to excite many crypto purists.

The central ethos that has been the driving motivational force behind the creation of the most widely used cryptocurrencies like Bitcoin (BTC) and Ether (ETH) is that their blockchains are 1) public and permissionless, 2) transparent and open source and 3) decentralized.

Citigroup’s private blockchain that will power its new tokenization service will presumably be none of these things.

Moreover, competition from private blockchains run by banks like Citigroup that don’t live up to any of crypto’s core values could weaken demand in the long run for public blockchains.

Institutional Adoption Continues

While crypto purists and critics probably won’t hail Citigroup’s new product as good news, it is in fitting with an important trend within the traditional finance industry – major institutions are taking increased interest in crypto, whether that be in existing digital assets themselves, or the underlying technology.

Deutsche Bank recently announced that it had teamed up with a digital asset custody firm called Taurus to work on tokenization and digital asset custody services.

Meanwhile, since June, dozens of major asset managers including the likes BlackRock, Fidelity and Vanguard have applied to set-up spot Bitcoin Exchange Traded Funds (ETFs), which would significantly lower the barrier for traditional investors to dedicate a portion of their portfolios to the cryptocurrency.

Elsewhere, PayPal has plans to issue a US dollar-pegged stablecoin called PayPal USD (PYUSD) which could serve as a major crypto on-ramp for consumers and businesses.