Citigroup is preparing to make a significant move into the digital asset space, exploring stablecoins and other cryptocurrencies pegged to asset prices. The U.S. banking giant also evaluates alternative ways to help clients accelerate payments. The push comes on the heels of new U.S. legislation enabling banks to issue stablecoins directly—provided they are backed 1:1 by risk-free reserve assets such as U.S. Treasuries or cash. This creates fresh opportunities for major custody banks like Citi to expand their offerings in the regulated digital finance arena. Biswarup Chatterjee, Citigroup’s Global Head of Partnerships and Innovation within its services division, revealed the bank may start by providing custody solutions for the high-value collateral backing stablecoins. These reserves could include U.S. government bonds and cash-equivalent holdings. Citigroup’s services arm already manages treasury, cash, and payment operations for some of the world’s largest corporations. Adding stablecoin custody would deepen its role in safeguarding client assets while aligning with regulatory requirements. Other heavyweight financial institutions, including Bank of America and Fiserv, are also exploring stablecoin opportunities. To date, McKinsey estimates that one stablecoin issued has a value of around $250 billion. Most still serve as a vehicle for speculation rather than practical payments. Citi expands blockchain payments and eyes crypto ETF custody market Citigroup has been using blockchain technology to transfer tokenized U.S. dollars between its accounts in New York, London, and Hong Kong. Through its Distributed Ledger Technology (DTC) platform, these transfers are available 24/7—unlike traditional banking systems that operate within set hours. The next step could see customers instantly moving stablecoins from one account to another. Citi is also developing solutions to convert stablecoins into U.S. dollars for same-day settlements. According to Chatterjee, the bank is already discussing practical, real-world use cases for these innovations with clients. The expansion could significantly streamline cross-border payments for companies by cutting costs and removing delays. In addition, the bank is exploring digital asset custody solutions linked to cryptocurrency exchange-traded funds (ETFs) and other services. The approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission last year prompted several asset managers to launch funds tracking Bitcoin’s price. These ETFs require secure custody of the underlying assets—a space dominated by Coinbase, which holds assets for more than 80% of crypto ETF issuers. For example, BlackRock’s iShares Bitcoin Trust has a market value of around $90 billion. Citigroup’s entry into the custody arena could intensify competition and reshape the ETF custody market. Citi eyes stablecoins as regulatory green light spurs big bank crypto moves Citigroup’s plans come amid a more permissive regulatory environment. That contrasts with the Biden administration, which signaled that legacy financial companies are relatively agnostic about jumping into crypto. The GENIUS Act created clarity and new definitions that industry insiders say will prompt major institutions to enter the game. Still, compliance will be strict. Banks must comply with anti-money-laundering laws and KYC measures and undergo the necessary checks to ensure all cryptoassets involved are clean from nefarious activities. Security and fraud prevention will be essential to gain trust in this new market. While Citi has yet to make an official announcement, it is reportedly exploring its stablecoin offering. That would put it in good company with banks like JPMorgan, which has its own JPM Coin for institutional payments. Just recently, Citi CEO Jane Fraser confirmed that the bank is exploring tokenized deposits and digital settlement options. Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.
