Citigroup is launching a blockchain-based marketplace for shares of private companies, looking to give wealthy and institutional investors a new way to gain exposure to pre-IPO firms as Wall Street pushes deeper into tokenized finance.

According to The Wall Street Journal, the platform will use tokenized depositary receipts issued by Citi, which represent ownership interests in private companies. The offering will initially be initially available to foreign investors, with US access planned at a later date.

The initiative allows investors to invest in private company shares “right next to their Apple stock, Citi digital asset executive Artem Korenyuk told the Journal.

Major banks are increasingly adopting tokenization to modernize traditional financial markets. Citi argues that structuring private investments through tokenized depositary receipts offers a more transparent alternative to special-purpose vehicles (SPVs), which have become a common, but often opaque, way for investors to access private companies.

That distinction is notable as interest in pre-IPO investing surges. Several fintech platforms, including Robinhood, have explored offering tokenized exposure to private companies such as OpenAI, though those products generally provide indirect economic exposure rather than legal ownership of the underlying shares. OpenAI last year cautioned investors that these so-called tokenized stocks do not represent equity in the company. 

OpenAI’s warning to investors on buying tokenized shares. Source: OpenAI Newsroom

The underlying infrastructure of the venture’s blockchain will be operated by SIX Digital Exchange, a subsidiary of Switzerland’s stock exchange operator, SIX Group. Citi said it is already in discussions with several large private companies about making their shares available on the platform. 

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Private markets tend to outperform over time

Growing interest in pre-IPO investing reflects a broader shift toward private markets, where companies are staying private for longer and generating more of their value before reaching public exchanges.

Last December, the American Investment Council published a report citing PitchBook data showing that private equity outperformed the S&P 500 index across five-, 10-, 15- and 20-year investment horizons. This was seen despite the index delivering stronger returns over shorter time periods.

Private equity has outperformed the broader market over longer time horizons. Source: American Investment Council

At the time, American Investment Council President and CEO Will Dunham argued that private equity’s long-term outperformance strengthened the case for expanding retail access through investment vehicles such as 401(k) plans.

The sector’s strong returns, coupled with the trend of companies staying private for longer, have fueled investor interest in pre-IPO opportunities and heightened anticipation for major public listings.

The frenzy surrounding SpaceX’s IPO underscores the trend, with Bloomberg reporting that retail investors alone have placed more than $70 billion in orders for Friday’s offering as of Thursday. Elon Musk’s rocket and AI company is targeting a valuation of $1.8 trillion after its public debut.

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