Banco do Brasil has invested $5m in a digitally native structured note issued by Citi on Euroclear’s blockchain-based infrastructure, in what the Brazilian lender describes as the first transaction of its kind involving a Latin American institution.
The investment was made through Banco do Brasil’s proprietary treasury and represents its first transaction involving a digital note. The instrument was issued by Citigroup Global Markets Funding Luxembourg SCA on Euroclear’s Digital Financial Market Infrastructure (D-FMI) platform.
Citi’s London branch, operating through Citibank N.A., acted as the issuance and payment agent. The note was created, registered and managed through Euroclear’s distributed-ledger infrastructure, which is designed to reduce the number of processing stages and improve the traceability of transactions.
The deal gives Banco do Brasil direct exposure to a security created and administered using blockchain technology. It forms part of a wider series of experiments by financial institutions seeking to move conventional market instruments onto distributed ledgers.
Banco do Brasil said the transaction was part of its assessment of new financial infrastructure and its potential role in the future of capital markets. Unlike a traditional note, which can pass through several separate systems and sequential operational processes, a digitally native instrument is handled through blockchain-based infrastructure from the point of issuance.
According to the bank, the structure can give participants a more integrated record of the transaction while supporting settlement, reconciliation and asset management. It said the approach may also reduce operational steps and improve visibility across the asset’s lifecycle.
Banco do Brasil participated as the investor rather than solely acting as a financial intermediary. Its proprietary treasury placed the institution directly on the investment side of the issuance.
Francisco Lassalvia, vice president of Wholesale Banking at Banco do Brasil, said the lender viewed the digitisation of financial markets as a long-term structural development.
He said transactions such as the Citi deal could help create the standards, governance arrangements and infrastructure needed to support a new generation of digital assets. Such systems, he added, could improve market efficiency while allowing institutions to pursue innovation with security and operational resilience.
Citi issues note through Euroclear platform
Citi issued the $5m structured note through Citigroup Global Markets Funding Luxembourg SCA, while Euroclear supplied the digital infrastructure used to create and manage it.
Euroclear operates securities settlement and post-trade services for financial institutions across global markets. Its D-FMI platform extends that role to digitally native financial instruments built using distributed-ledger technology.
The security was created in digital form on the platform from the outset. That distinguishes the transaction from arrangements in which a conventional asset is issued first and later represented by a token.
Banco do Brasil said native digitisation could reduce the operational steps involved in processing an asset and provide a clearer, traceable record of activity. The transaction maintained several familiar capital-markets responsibilities: Citi issued the note through its Luxembourg entity, its London branch performed the issuance and payment-agent functions, Euroclear provided the D-FMI infrastructure and Banco do Brasil invested through its treasury.
Roksolana Dushynska, Global Markets Issuance Equity Structuring Manager at Citi, said the transaction was part of the bank’s work in digital capital markets.
She said distributed-ledger technology was being applied to capital markets to improve efficiency, transparency and accessibility for investors. Citi intends to continue developing models using the technology as financial institutions explore new ways to issue, trade and manage assets, she added.
The Banco do Brasil transaction comes as banks, payments companies and market infrastructure providers examine how blockchain systems can operate alongside established institutional networks.
Payments company Bottomline has connected its banking network with Chainlink infrastructure, giving more than 600 banks a route to blockchain-based settlement while retaining existing ISO 20022 messaging. Bottomline processes more than $16tn in payments each year, and the integration was designed to connect conventional payment instructions with public and private blockchain networks.
That arrangement is different from Banco do Brasil’s investment. Bottomline’s system focuses on payment messaging and settlement, whereas the Banco do Brasil transaction uses blockchain infrastructure for the issuance and management of an investment instrument.
Wider financial-sector blockchain trials
Other parts of the traditional financial system are also testing digitally native assets.
Circle is preparing to launch an institutional blockchain whose founding validators include BlackRock, DTCC, Visa, Mastercard, Standard Chartered and Intercontinental Exchange. The network is expected to support tokenised financial assets, with DTCC planning to tokenise assets held in DTC custody on the chain from 2027.
BlackRock is expected to deploy its tokenised BUIDL fund on the same network. That would allow institutional participants to subscribe to, redeem and use fund assets within an on-chain environment.
Banco do Brasil’s investment remains focused on a structured note rather than a fund or payment product, but it follows a similar principle: moving parts of conventional financial-market activity onto distributed-ledger infrastructure.
The distinction between digitally native securities and other blockchain-based products has become increasingly important as firms adopt different forms of tokenisation.
Some tokenised products track the economic value of an underlying asset without granting investors ownership rights. Robinhood’s stock tokens, for example, provide exposure to equities without making token holders shareholders in the companies whose stocks they follow.
Other structures use blockchain during the actual issuance or registration of the security. Banco do Brasil’s investment falls into that category because the structured note was issued natively through Euroclear’s digital market infrastructure.
Blockchain technology is also being considered for trading. Hayden Adams, the founder of Uniswap, recently discussed the possibility of tokenised securities being traded directly against one another in blockchain-based liquidity pools rather than requiring every transaction to settle against dollars.
When the proposal was discussed, 10 tokenised stock pools against SPY had generated $33m in trading volume from more than 11,000 traders, offering another example of how blockchain infrastructure is being tested around conventional financial assets.
For Banco do Brasil, the investment forms part of a broader evaluation of technology that could support institutional products and financial-market infrastructure. The lender said it was examining new infrastructure models that could contribute to the modernisation of the financial system and help support products and services for institutional investors.
The transaction took place on the 19th, with Banco do Brasil investing through its proprietary treasury while Citi and Euroclear handled the issuance and infrastructure functions for the $5m digitally native structured note.
