Citi's Sept. 24 report finds that 77% of financial institutions expect to use some form of tokenized collateral during 2026. The bank says idle collateral already costs large institutions roughly $346 million a year, while DTCC prepares an October launch for tokenized Treasuries and repo markets already move billions through blockchain rails.
Citi's Sept. 24 report found that 77% of financial institutions expect to use some form of tokenized collateral during 2026, as banks and market operators push blockchain-based tokenization into live settlement production. The report, titled Digital Collateral: A Practical Reality and prepared with The ValueExchange, tracks a shift from testing toward practical use of tokenized cash, money market funds and government bonds.
Idle collateral costs institutions $346 million a year
Citi's findings show that about 25% of collateral remains idle or unremunerated because settlement hours and fragmented systems keep assets from moving when needed. As much as $15 billion of collateral can sit idle at a single institution, according to Citi's own report. Citi estimates the inefficiency costs a Tier 1 institution roughly $346 million a year in lost income.
Large institutions manage about $74 billion in collateral each day across roughly 65 custody locations, the report says. An earlier Nasdaq and ValueExchange survey had found that 52% of institutions planned to actively manage tokenized collateral by 2026 — Citi's newer figure covers a wider set of potential uses.
DTCC targets an October launch for tokenized Treasuries
The Depository Trust & Clearing Corporation plans to launch its DTC Tokenization Service in October, after moving the project into production on July 15. Participating firms completed transactions covering Treasury repo, collateral pledges, securities lending, equity settlement and central counterparty margin workflows, with more than 30 companies taking part, including BlackRock, Goldman Sachs, JPMorgan, Citadel Securities and Nasdaq.
DTC received a Securities and Exchange Commission no-action letter in December 2025 clearing the project, covering Treasury bills, notes, bonds and ETFs linked to major indexes.
Tokenized repo already moves billions each month
Repo already ranks among the most developed uses of blockchain collateral. Citi estimates about 5% of monthly repo volume is already transacted in tokenized form. Broadridge said its Distributed Ledger Repo platform processed $8 trillion in transactions during July, with average daily volume reaching $365 billion.
Citi also found that around 60% of global margin remains in non-yielding cash. The bank said tokenized money market funds could combine yield with faster transferability, keeping collateral invested until closer to the moment it needs to move. JPMorgan has already filed for an OnChain Liquidity-Token Money Market Fund built on the same premise.
Around-the-clock settlement remains the goal
Derivatives and digital-asset markets trade continuously, but banks and custodians keep regional hours, so firms may prefund positions or hold larger liquidity buffers. Citi said tokenization could move collateral closer to a 24/7 cycle. DTCC is building a separate Collateral AppChain toward the same end, expected to enter production in Q4 2026.
Citi acknowledged that legal frameworks, legacy systems and institutional risk controls still slow adoption, even as the report describes a shift from watching tokenized collateral to using it in live treasury and margin operations.
Sources: Citi, crypto.news
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