How Tokenized Payments are Enabling Real-Time Liquidity

The digital asset landscape is evolving fast, with institutional adoption accelerating as regulations take shape. In this Q&A, Citi Institute’s Ronit Ghose speaks with Ryan Rugg, Head of Digital Assets for Citi’s Treasury and Trade Solutions, about key developments in tokenization, blockchain, and regulatory shifts driving institutional adoption. We explore how smart contracts, automation, and tokenization have the potential to reshape financial services.

This Q&A was adapted from a Citi Institute Podcast episode and has been edited for clarity and brevity.

Ronit Ghose: Digital assets have been a topic for years, but we're in a particularly interesting time, especially with regards to institutional adoption and regulatory changes in the U.S. and globally. We’ve seen some regulatory clarity emerge—Trump's executive order and an interpretive letter from banking regulators. Can you break these down?

Ryan Rugg: Regulatory clarity is critical. Citi, like other large banks, won’t operate in a gray area—we need a clear framework before engaging. Recently, the OCC’s 1179 process (which required banks to seek regulatory non-objection for activities in digital assets) was repealed, along with the SEC’s SAB 121, which prevented large banks from custodying crypto assets. Citi is in frequent dialogue with regulators and legislators to ensure digital assets are integrated safely into financial services. We expect this year to bring even broader regulatory clarity, which will expand opportunities.

Ghose: Outside the U.S., we’ve seen Europe introduce MiCA, the UAE establish a dedicated digital asset regulator, and Singapore continue leading the way. What’s Citi’s global view?

Rugg: Citi follows U.S. law as a U.S.-domiciled bank, but we also work closely with global regulators in key markets like the UK, Singapore, and the EU. In each jurisdiction, we ensure regulatory compliance before launching new services. For example, Citi Token Services for Cash (CTS) operates in the U.S., UK, and Singapore, aligning with regional regulatory frameworks.

Ghose: What is Citi Token Services for Cash?

Rugg: CTS launched in September to address real-time liquidity and payments across multiple jurisdictions. Our clients wanted multi-bank, always-on payment solutions. Traditionally, they had to park cash buffers in different regions to ensure liquidity for payments. With CTS, payments move 24/7/365, eliminating inefficiencies. For example, during Chinese New Year, a client was able to move funds between Singapore and the U.S. when local markets were closed, ensuring payments weren’t interrupted.

Ghose: Citi’s traditional banking rails handle huge volumes—around $4 trillion per day—but they operate at "human speed"—shutting down on weekends and evenings. What problem is a product like CTS solving for?

Rugg: One of the unique attributes of blockchain is the ability to have smart contracts. Which is another way of saying, if this happens, then do that. We did a pilot last year with ships in a canal ecosystem where, typically, they have to have letters of credit to be able to pass through, and only during traditional banking hours. We took our tokenized deposits and pre-funded a smart contract that said, if the ship receives fuel, automatically release payment. I would say CTS is just scratching the surface by enabling our clients to have this always on payments capability, but being able to add the programmability of it I think is a huge benefit to our clients for the future.

Ghose: Let’s break down programmability—what does that mean in financial services?

Rugg: We often joke that a smart contract is not actually smart or a contract—it’s just code that automates transactions based on predefined rules. Going back to my earlier example: If an account balance drops below $100M, transfer $50M from Singapore. It’s about really automating the process versus having to have the checks and balances of humans in it, to be able to actually use code as the ability to be able to send money. So making money smart is what we call it because then it actually becomes completely digitized. 

Ghose: Tokenization extends beyond payments—how do you see it evolving across capital markets and financial services in the next 5-10 years?

Rugg: Tokenization is reshaping financial services, especially in areas like the efficient issuance of digital bonds, custody settlement, and tokenizing traditional assets like bonds, real estate, and money markets. It can enable the instantaneous movement of assets as well as liquidity and payments.

We talk about the “Holy Grail” being atomic settlement (instant trade & payment clearance). Instead of relying on multiple intermediaries, tokenization could allow assets to settle in real time without intermediaries or messaging delays.

Ghose: We’ve talked about major players like BlackRock, Fidelity, and Franklin Templeton entering this space. How do you see this evolving?

Rugg: Initially, the focus was on tokenizing everything—mortgages, bonds, equities. But the challenge was always settlement—we still had to go back to traditional rails. Now, we're seeing real growth in money markets and tokenized deposits. Large asset managers see tokenization as a way to improve liquidity and operational efficiency while reducing risk.  

Ghose: Why take existing financial assets and put them on chain? Seems very complicated and duplicative and hard to do?

Rugg: The benefits depend on the asset class. It’s a broad ecosystem that includes everything from assets like equities and bonds, as well as real estate and other things. Because there's so many different flavors and types, it's used for different reasons. Some of them are for efficiency plays, some of them for a store of value, some of them are for moving money without a third party.

So, for example, tokenized deposits were developed to enable instantaneous movement of payment and liquidity. Money markets could be tokenized for collateral purposes. For asset backed securities, which includes repos, bonds, and equities, tokenization allows automation, which lowers operational costs, adds efficiencies and creates transparency across the asset’s lifecycle. Then there’s taking very paper-driven businesses such as trade (think of our boat passing through the canal with its letter of credit) and being able to create smart contracts. And then there are stablecoins which were created because of the volatility in crypto.

Ghose: Let’s talk about crypto and stablecoins. Banks haven’t traditionally been involved—what’s changing?

Rugg: It really depends on legislation. There are currently two draft bills proposed in Congress that could provide  regulatory clarity for stablecoins. If legislation on stablecoins is passed, this could open the door for more institutional involvement in stablecoins and tokenized assets.

As I mentioned earlier, banks won’t participate if there's not clear regulation out there. That's why Citi focused on CTS first. Being able to automate that whole fiat side of it, to have that be 24/7/365 is definitely needed in all digital asset markets.

But as we saw with the growth in the ETF market once the SEC approved it, I expect demand to continue to grow as more large enterprises enter this space.

Ghose: The coming years will be pivotal for tokenization, digital assets, and institutional crypto adoption.

Rugg: Absolutely. We’re just scratching the surface of what’s possible.