Citigroup is launching a blockchain-based private company stock market, aiming to provide wealthy and institutional investors with a modern way to gain exposure to pre-IPO companies as Wall Street dives deeper into tokenized financing.

According to Wall Street Journalthe platform will exploit tokenized depository receipts issued by Citi, which represent ownership interests in private companies. The offer will initially be available to foreign investors, with access to it in the USA planned at a later date.

The initiative allows investors to invest in shares of private companies “right next to Apple shares,” Citi digital assets director Artem Korenyuk told the Journal.

The largest banks are increasingly implementing tokenization to modernize time-honored financial markets. Citi argues that structuring private investments around tokenized depository receipts provides a more see-through alternative to special purpose vehicles (SPVs), which have become a common but often murky way for investors to access private companies.

This distinction is noteworthy as interest in pre-IPO investing is growing rapidly. Several fintech platforms, including Robinhood, have considered offering tokenized exposure to private companies such as OpenAI, although these products typically provide indirect economic exposure rather than legal ownership of the underlying shares. OpenAI last year warned investors that these so-called tokenized shares do not represent the company’s capital.

OpenAI investor warning regarding purchasing tokenized shares. Source: OpenAI newsroom

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

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Private markets perform better over time

The growing interest in pre-IPO investing reflects a broader shift toward private markets, where companies remain private longer and generate more of their value before listing on public exchanges.

Last December, the American Investment Council published a report citing PitchBook data showing that private equity outperforms the S&P 500 index over a five-, 10-, 15- and 20-year investment horizon. This was noticeable despite the index providing higher rates of return over shorter periods.

Over the longer term, private equity outperforms the broader market. Source: American Investment Council

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

High profits in the sector, combined with the tendency for companies to remain in the private sector longer, have increased investor interest in pre-IPO opportunities and increased anticipation of major public listings.

The frenzy surrounding the SpaceX IPO highlights this trend, as seen on Bloomberg reporting that as of Thursday, retail investors alone had placed more than $70 billion in orders for Friday’s offering. Elon Musk’s rocket and artificial intelligence company is valued at $1.8 trillion following its public debut.

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