Banco do Brasil has invested in a $5 million digitally native structured note issued by Citi on Euroclear’s blockchain-based infrastructure, completing what the lender described as the first transaction of its kind involving a Latin American institution.
Banco do Brasil said its proprietary treasury participated as an investor in the Digitally Native Structured Note issued by Citigroup Global Markets Funding Luxembourg SCA on Euroclear’s Digital Financial Market Infrastructure, or D-FMI, platform.
Citi Issuer Services, operating through Citibank N.A.’s London branch, served as the issuance and payment agent for the note.
The transaction gives Banco do Brasil direct exposure to a security issued and managed through blockchain infrastructure, part of a series of institutional experiments seeking to bring conventional financial instruments onto distributed ledgers.
Banco do Brasil enters digital note market through Citi deal
Banco do Brasil described the transaction as its first investment in digital notes and part of its work to assess new financial infrastructure built around distributed ledger technology.
Unlike a conventional note, which can depend on several systems and sequential processing steps, the digital instrument is issued, registered and managed through blockchain-based infrastructure.
Banco do Brasil said the structure can reduce operational steps while giving participants greater visibility over transaction records and supporting settlement, reconciliation and asset management within a more integrated system.
The bank participated through its proprietary treasury, placing it directly on the investor side of the issuance rather than acting only as a financial intermediary.
Its involvement comes as banks, payment companies and market infrastructure providers continue testing how blockchain can work alongside existing institutional systems.
Crypto.news previously reported that payments company Bottomline had 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 $16 trillion in payments each year, and the integration was designed to connect conventional payment instructions with public and private blockchain networks.
Banco do Brasil’s transaction uses a different structure, with blockchain infrastructure supporting the issuance and management of an investment instrument rather than payment messaging.
Francisco Lassalvia, vice president of Wholesale Banking at Banco do Brasil, said the lender views financial market digitization as a long-term structural development.
“We believe that the digitalization of financial markets represents a long-term structural trend,” Lassalvia said.
He said transactions of this type can help establish standards, governance systems and infrastructure capable of supporting a new generation of digital assets.
According to Lassalvia, such systems could increase market efficiency while allowing financial institutions to pursue innovation with security and operational resilience.
Citi issues $5 million note through Euroclear D-FMI
Citi issued the structured note through Citigroup Global Markets Funding Luxembourg SCA, while Euroclear supplied the digital infrastructure used to create and manage the instrument.
Euroclear operates securities settlement and post-trade infrastructure 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 blockchain-based platform from issuance, distinguishing it from structures where a conventional asset is created first and later represented through a token.
Banco do Brasil said native digitization can reduce the number of operational steps involved in handling an asset while improving transaction traceability.
Similar experiments have expanded across conventional finance as financial institutions test blockchain infrastructure for securities, funds, payments and collateral.
Circle, for instance, 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 tokenized financial assets, with DTCC planning to tokenize DTC-custodied assets on the chain beginning in 2027.
BlackRock is expected to deploy its tokenized BUIDL fund on the same network, allowing institutional participants to subscribe, redeem and use fund assets within an onchain environment.
The Banco do Brasil investment remains focused on a structured note rather than a fund or payment instrument, but it uses a similar underlying approach of placing parts of conventional financial-market activity on distributed ledger infrastructure.
Roksolana Dushynska, Global Markets Issuance Equity Structuring Manager at Citi, said the transaction formed part of the bank’s work in digital capital markets.
“The most recent issuance of our Native Digital Structured Note reinforces the role Citi is playing in accelerating the growth of digital capital markets,” Dushynska said.
She said distributed ledger technology was being used in capital markets to improve efficiency, transparency and accessibility for investors.
Citi intends to continue developing models using the technology as financial institutions examine new ways to issue, trade and manage assets, she added.
Digital notes can reduce conventional processing steps
Traditional securities infrastructure can involve separate systems and intermediaries handling issuance, registration, reconciliation, settlement and recordkeeping.
Information may need to pass between several platforms as a transaction moves through its lifecycle.
Under the model used for Banco do Brasil’s investment, the note is managed through blockchain infrastructure intended to provide participants with a common digital record.
Banco do Brasil said the setup has the potential to make settlement, reconciliation and asset management processes faster and more efficient while increasing transparency and traceability.
The distinction between digitally native securities and other blockchain-based financial products has become increasingly relevant as companies adopt different forms of tokenization.
Some tokenized products merely track the economic value of an underlying asset without giving investors ownership rights. Robinhood’s stock tokens, for example, provide economic exposure to equities without making token holders shareholders of the companies whose stocks they track.
Other models use blockchain as part of the actual securities issuance or registration process.
Banco do Brasil’s investment falls into the latter category because the structured note was issued natively through Euroclear’s digital market infrastructure.
Financial firms are testing similar models for trading. Uniswap founder Hayden Adams recently discussed how tokenized securities could trade directly against one another in blockchain-based liquidity pools rather than requiring every transaction to settle against dollars.
Ten tokenized stock pools against SPY had generated $33 million in trading volume from more than 11,000 traders when the proposal was discussed, showing another method through which blockchain infrastructure is being tested around conventional financial assets.
Banco do Brasil tests blockchain infrastructure for institutional products
For Banco do Brasil, the $5 million investment forms part of its assessment of technology that could support institutional products and financial-market infrastructure.
The lender said it is evaluating new infrastructure models that could contribute to modernization of the financial system and support products and services for institutional investors.
Its participation places a major Latin American bank directly inside a digitally native securities transaction conducted through established international financial institutions.
The structure retained several roles familiar to conventional capital markets. Citi remained responsible for issuing the note through its Luxembourg entity, its London branch handled issuance and payment agency functions, Euroclear provided the D-FMI platform and Banco do Brasil participated as the investor.
Banco do Brasil said financial institutions, regulators and investors worldwide have been paying increased attention to digital platforms capable of issuing and settling financial instruments.
Native digitization can reduce operational steps and provide a traceable transaction history while creating infrastructure that can support new models for trading, settlement and asset management, according to the bank.
The transaction took place on the 19th, with Banco do Brasil investing through its proprietary treasury and Citi and Euroclear handling the issuance and infrastructure functions for the $5 million digitally native structured note.
