Banco do Brasil has made a significant investment in a $5 million digitally native structured note issued by Citi on Euroclear’s blockchain-based infrastructure, marking a groundbreaking transaction involving a Latin American institution.
Banco do Brasil’s proprietary treasury participated as an investor in the Digitally Native Structured Note issued by Citigroup Global Markets Funding Luxembourg SCA on Euroclear’s Digital Financial Market Infrastructure, or D-FMI, platform.
Citi Issuer Services, operating through Citibank N.A.’s London branch, acted as the issuance and payment agent for the note.
This transaction gives Banco do Brasil direct exposure to a security issued and managed through blockchain infrastructure, representing a shift towards integrating conventional financial instruments onto distributed ledgers.
Banco do Brasil’s Venture into Digital Notes Market Through Citi Collaboration
Banco do Brasil described this transaction as its first foray into digital notes investment, part of its exploration of new financial infrastructure based on distributed ledger technology.
Unlike traditional notes that rely on multiple systems and sequential processing steps, digital instruments are issued, registered, and managed through blockchain-based infrastructure.
Banco do Brasil highlighted that this structure can streamline operational processes, enhance visibility over transaction records, and facilitate settlement, reconciliation, and asset management within a more cohesive system.
The bank’s involvement through its proprietary treasury positions it directly as an investor in the issuance, rather than simply acting as a financial intermediary.
As banks, payment companies, and market infrastructure providers continue to experiment with integrating blockchain into existing institutional systems, Banco do Brasil’s move signifies a strategic step in embracing this evolving financial landscape.
Previous reports from Crypto.news have mentioned Bottomline’s integration with Chainlink infrastructure to enable over 600 banks access to blockchain-based settlement, while maintaining existing ISO 20022 messaging.
Bottomline processes over $16 trillion in payments annually, and the integration aimed to connect traditional payment instructions with both public and private blockchain networks.
While Banco do Brasil’s transaction focuses on a different structure, utilizing blockchain infrastructure for the issuance and management of an investment instrument rather than payment messaging, it aligns with the broader trend of leveraging distributed ledger technology in financial markets.
Francisco Lassalvia, Banco do Brasil’s Vice President of Wholesale Banking, emphasized the institution’s view of financial market digitization as a long-term structural shift.
“We believe that the digitalization of financial markets represents a long-term structural trend,” Lassalvia stated.
He emphasized that transactions of this nature can play a crucial role in establishing standards, governance systems, and infrastructure to support a new generation of digital assets, fostering market efficiency and innovation with security and operational resilience.
Citi’s $5 Million Note Issuance Through Euroclear D-FMI
Citi issued the structured note through Citigroup Global Markets Funding Luxembourg SCA, with Euroclear providing the digital infrastructure for creating and managing the instrument.
Euroclear, known for its securities settlement and post-trade infrastructure for global financial institutions, extended its role to digitally native financial instruments built using distributed ledger technology via the D-FMI platform.
The security was digitally created on the blockchain-based platform from issuance, distinguishing it from structures where a traditional asset is first created and later represented through a token.
Banco do Brasil highlighted the benefits of native digitization in reducing operational steps in asset handling, while enhancing transaction traceability.
Similar experiments have emerged across conventional finance as institutions explore the potential of blockchain infrastructure for securities, funds, payments, and collateral.
Circle, for instance, is gearing up to launch an institutional blockchain with founding validators including BlackRock, DTCC, Visa, Mastercard, Standard Chartered, and Intercontinental Exchange, supporting tokenized financial assets.
BlackRock plans to deploy its tokenized BUIDL fund on the network, enabling institutional participants to interact with fund assets within an onchain environment.
While Banco do Brasil’s investment focuses on a structured note rather than a fund or payment instrument, it aligns with the trend of leveraging distributed ledger infrastructure for traditional financial activities.
Roksolana Dushynska, Citi’s Global Markets Issuance Equity Structuring Manager, highlighted that this transaction reflects the bank’s commitment to digital capital markets development.
“The most recent issuance of our Native Digital Structured Note reinforces the role Citi is playing in accelerating the growth of digital capital markets,” Dushynska emphasized.
She noted that distributed ledger technology is enhancing efficiency, transparency, and accessibility for investors in capital markets, with Citi’s ongoing exploration of models leveraging this technology for issuing, trading, and managing assets.
Streamlining Conventional Processing Steps with Digital Notes
Traditional securities infrastructure often involves disparate systems and intermediaries managing issuance, registration, reconciliation, settlement, and recordkeeping.
Information may traverse multiple platforms as transactions progress through their lifecycle.
In Banco do Brasil’s investment model, the note is managed through blockchain infrastructure to provide participants with a unified digital record, potentially expediting settlement, reconciliation, and asset management processes while enhancing transparency and traceability.
The distinction between digitally native securities and other blockchain-based financial products is becoming more significant as companies adopt diverse forms of tokenization.
While some tokenized products track the economic value of an underlying asset without granting ownership rights to investors, others integrate blockchain into the securities issuance or registration process.
Banco do Brasil’s investment falls into the latter category, as the structured note was issued natively through Euroclear’s digital market infrastructure.
Financial firms are exploring similar models for trading, with discussions on how tokenized securities could trade directly against each other in blockchain-based liquidity pools, showcasing the ongoing experimentation with blockchain infrastructure in traditional financial assets.
Banco do Brasil’s Exploration of Blockchain Infrastructure for Institutional Products
For Banco do Brasil, the $5 million investment represents part of its evaluation of technology supporting institutional products and financial-market infrastructure.
The institution is assessing new infrastructure models that could contribute to the modernization of the financial system and enable the development of products and services for institutional investors.
By directly participating in a digitally native securities transaction through established international financial institutions, Banco do Brasil is positioning itself at the forefront of digital platforms capable of issuing and settling financial instruments.
The transaction maintains several roles familiar to conventional capital markets, with Citi handling note issuance, Euroclear providing the D-FMI platform, and Banco do Brasil acting as the investor through its proprietary treasury.
Banco do Brasil emphasized the potential of native digitization to streamline operational processes, enhance transaction traceability, and create infrastructure supporting new trading, settlement, and asset management models.
The transaction, which took place on the 19th, marked Banco do Brasil’s investment through its proprietary treasury, with Citi and Euroclear managing the issuance and infrastructure functions for the $5 million digitally native structured note.