Citi's Blockchain Pre-IPO Platform Trades Liquidity for Privacy, Polygon's Marc Boiron Says

FINANCE FEEDS ·

When Citi launched its blockchain-based platform for pre-IPO shares in June, it solved the problem that has long kept private equity off-chain: how to let wealthy clients trade stakes in private companies without exposing cap tables and positions to the wider market. It did so by building the system closed, visible only to the parties Citi lets in. That design carries a cost, according to Marc Boiron, CEO of Polygon Labs . Lock the shares inside one private system, he told FinanceFeeds, and the only buyers an eligible investor can ever reach are the handful already inside it. “Confidentiality that requires trapping the asset is not really a feature,” he said, framing privacy and liquidity not as a tradeoff but as two things a closed venue needlessly forces on its users. The critique lands on the central tension in tokenized private markets, where issuance has sprinted ahead of tradability. A report highlighted by Forbes this week put the tokenized real-world asset (RWA) market at roughly $60 billion, yet found $32.9 billion of it spread across 910 assets, recorded zero weekly transfer activity. Just 62 assets account for 88% of the market’s value. David Taylor, co-founder and CEO of tokenization firm EtherFuse, who was quoted in the report, called the sector a “waiting room” rather than a market. Citi’s tokenized pre-IPO platform prioritizes privacy, but a closed blockchain network may come at the cost of broader liquidity for tokenized assets. Boiron’s case rests on separating two things the debate tends to blur. Privacy, he argues, is a cryptographic problem: zero-knowledge proofs can let a regulator or counterparty verify that a transfer is valid and a buyer qualifies without ever seeing the deal terms. Eligibility is a programmable one, enforced at the level of the asset so it only settles into a wallet that meets the issuer’s conditions. Both, he says, work today on open networks, which means a bank can keep the confidentiality without stranding the asset on its own ledger to get it. The distinction matters because much of what passes for privacy in private markets today is really just isolation. The asset sits on a single institution’s ledger, and confidentiality becomes a byproduct of the walls rather than a feature of the design, one that leaves fully eligible buyers unable to reach the asset unless they are already clients of the bank holding it. He is careful about what “wider” means, and it is not what critics might assume. The legally eligible universe for a private security does not change. Buyers are still accredited or qualified investors or eligible non-US investors under the relevant exemptions. The widening, in his telling, is in reach rather than in law: the same eligible investors can find the asset across venues and borders instead of only where they already hold an account. On that point, Boiron concedes ground that undercuts the more breathless tokenization claims. “Anyone telling you the technology expands who can lawfully buy a private share is selling something,” he said. Securities law sets the boundary, and it applies on-chain: in a January statement , US regulators confirmed that a security remains a security once tokenized, with the same transfer restrictions and eligibility rules attached. What changes, he argues, is everything downstream of eligibility, namely distribution, cost, and settlement. A siloed asset never gets quoted, he says, because market makers will not commit capital to something they cannot move off a single venue. “More wallets is not a market,” he added, acknowledging that open rails are a precondition for liquidity, not a guarantee of it. He points to precedent already running in the market. Tokenized institutional funds such as BlackRock’s BUIDL settle and move across public networks, Polygon among them, as evidence, he says, that a regulated product can live on open rails without giving up its compliance. Boiron’s argument goes beyond Citi: tokenization’s biggest bottleneck isn’t issuance or compliance, but liquidity. Without interoperable markets, even tokenized assets risk remaining digitally siloed. Boiron does not dispute that Citi’s tight grip on KYC, compliance, and issuer consent is exactly what a regulated bank’s clients and supervisors expect, calling it ‘responsible’ rather than ‘behind.’ A closed system, he allows, is the right call when a product is first to market and needs total regulatory certainty. Related: Citi Launches Blockchain Marketplace For Pre-IPO Company Shares: Report Citi, for its part, has said it wants other institutions to plug into the platform , which would deepen the buyer pool over time. The open question is whether that materializes or whether each bank builds its own enclosure. For Boiron, whose Polygon network has a direct stake in banks choosing public rails, the risk is staying closed once the tooling to be open and compliant already exists. On that path, he argues, the walls stop protecting the asset and start stranding it. Citi’s platform captures the divide now shaping tokenized markets. Institutions want privacy, and investors need liquidity, and the launch treats those as competing demands to be balanced inside one system. With billions in tokenized assets sitting largely inactive, the firms that reconcile the two, rather than simply tokenize assets and wait for a market to form, are the ones most likely to define the next phase of institutional adoption. TAGS citi , citi bank , IPO , Polygon , RWA Tokenization

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