Citi Securities Services Evolution 2025

22 | Securities Services Evolution 2025 Accelerating tomorrow: DLT and digital assets “Our major achievement in the last two years has been to create expertise, knowledge and belief. Now it’s time for the big venues to collaborate and to drive scale” Jorgen Ouakine, Head of Digital Assets, Euroclear 10% of market turnover within five years Since our first whitepaper in 2021, the path to commercial adoption of DLT and digital assets has had several phases. In 2021, significant initial interest in technology was characterized by high levels of experimentation and discovery as firms grappledwith the potentially disruptive implications of blockchain on their business models. The ‘cryptowinter’ of late 2022 then weeded out the less committed, leaving only the most dedicated firms to redefine their strategies and avoid rushed launches of crypto-custody and tokenization services. By 2024, those committed firms were growing valuablemarket share and increasing turnover (notably in fixed income-related activities, under the leadership of several key sovereign issuers), albeit still in comparatively small volumes given continuing challenges in ecosystem development and the legal terms that support them. At the end of 2024, non-cryptocurrency digital asset issuance exceededUSD25 billion, 11 and tokenized funds had gathered aroundUSD2 billion in AUM. 12 Whilst momentumwas clear, the industry had still not reached its tipping point. In 2025, that tipping point appears tantalizingly close. Over five years of industry learning and research has helped the industry to sharpen its focus to the point of clarity on several key areas. Today, the vast majority of effort is focused on three core use cases where the business case is clear and compelling: namely tokenized collateral, stablecoins and fund tokenization . And in industrymeetings, specific operating issues such as legal recourse and token identifiers are now being discussed. The foundations for business- driven problemsolving, based on distributed ledger technology, appear to be strengthening. Themarket clearly expects this positivemomentum to be sustained. In our survey, respondents expect around 10%of market turnover to be conducted using tokenized or natively digital securities within the next five years. Research by the ValueExchange suggests that expectations are highest in the private markets, where approximately USD202 billion of digital or tokenized securities are expected to be held by 2030, 13.9%of total volumes. In the (OTC) collateral space, a further 10.7%of total initial and variationmargin is expected to be digitized, as are 10.3%of daily fund subscriptions and redemptions. In practice, the ValueExchange research identifies that aroundUSD2 trillion-worth of non-equity digital assets will be traded daily or heldwithin five years –marking a likely increase in liquidity of around twenty to thirty times versus today. 13 Importantly, growth expectations are significantly higher in North America than in the rest of the world. Whilst those in the US expect up to 14% of all turnovers to be conducted using digital or tokenized assets by 2030, those in Europe expect only 10% of volumes and those in Asia Pacific expect only 9%. (Figure 10) As we explain in our regional chapters, the sudden transformation in American sentiment in 2025 has been a stand-out development this year with regulatory changes (such as the GENIUS Act of June 2025) adding to existing leadership fromCircle 14 , Blackrock 15 and other institutions in scaling digital liquidity at pace. What is going to trigger this adoption? Last year’s whitepaper highlighted the growing importance of liquidity and post-trade cost efficiencies as the drivers of investments into DLT. This year the same two criteria have risen to become the most significant areas of impact for DLT initiatives (with 43% and 51% of respondents citing these areas as being significantly impacted in the next 3 years). More than half of the survey’s respondents are clearer than ever that the ability of DLT to increase the velocity of securities around the world’s capital markets can have major impacts on their funding costs, financial resource requirements and operating costs before 2028. The growth of collateral What does thatmean inpractice? Itmeans that firms are focusing onmobilizing fixed income securities and cash, largely in the formof collateral as the fastest growing asset class inour survey (Figure11). As several industry initiatives (suchas theDTCC’s “Great