Citigroup Inc. is considering offering some custody and related services for stablecoins, a senior executive told Reuters, the latest indication that broad policy shifts in Washington are pushing large financial firms to expand into cryptocurrency.
The US Bank is not alone in having an eye on the stablecoin market; it joins a short list of legacy players, including Fiserv and Bank of America, eyeing moves.
This move follows the introduction of a new law that allows stablecoins to be used for payment, settlement, and other financial services on a large scale.
Stablecoins are cryptocurrencies pegged to some fiat currency or other asset, usually the US dollar.
The legislation requires issuers to back the coins with safe assets like US Treasuries or cash, opening up the door for custody banks with custody banks managing those reserves.
“Providing custody services for those high-quality assets backing stablecoins is the first option we are looking at,” said Biswarup Chatterjee, global head of partnerships and innovation for Citigroup’s services division.
Citi’s core services and broader digital asset ambitions
Citigroup’s services business, which includes treasury, cash management, payments, and other capabilities for large corporate clients, remains a key component of the firm despite continuous restructuring.
A McKinsey analysis estimates that over $250 billion in stablecoins have been produced to date, albeit they are largely used to settle bitcoin exchanges.
Citigroup announced last month that it was exploring releasing its stablecoin, but it had not before disclosed the entire scope of its digital asset strategy.
The bank is also looking at custody services for the digital assets that support crypto-related investment products.
Since the Securities and Exchange Commission approved exchange-traded funds tracking the spot price of bitcoin last year, asset managers have created a number of similar products.
The largest, BlackRock’s iShares Bitcoin Trust, presently has a market valuation of over $90 billion.
“There needs to be custody of the equivalent amount of digital currency to support these ETFs,” according to Chatterjee.
Coinbase now dominates this space, serving as custodian for more than 80% of crypto ETF issuers, according to the company.
Faster payments through tokenisation and stablecoins
Beyond custody, Citigroup is investigating the use of stablecoins to speed up payments. In typical banking, cross-border transfers might take several days or more.
The bank already provides “tokenised” US dollar payments, which use blockchain technology to transfer dollars between accounts in New York, London, and Hong Kong around the clock.
The next phase in development is to allow clients to send stablecoins across accounts or convert them to dollars for quick payments. Citi is currently discussing potential use cases for these services with clients, according to Chatterjee.
Regulatory shift and compliance considerations
Regulators under the current US administration, which initially took a more cautious position on letting big financial institutions into the volatile crypto sector, have grown increasingly permissive.
The policy shift has allowed banks to diversify into new crypto-connected products, but compliance requirements are still high.
In case of custody of crypto assets, Citigroup would be required to ensure that the underlying assets were not utilised to further criminal activity before acquisition.
Chatterjee said that organisations need to enhance cybersecurity and controls around operational protections against such theft.
Stablecoins would primarily remain subject to existing regulations, including anti-money laundering regulations and currency controls in some jurisdictions, for international transfers.
Stablecoin issuance still on the table
While Citigroup’s immediate focus is on custody and services related to stablecoins, Chatterjee stated that creating its stablecoin remained an option.
The bank is evaluating its involvement in the expanding digital asset ecosystem in response to regulatory clarification, market expansion, and shifting client needs.
If pursued, these measures would be one of the most significant for a large US bank in the stablecoin sector, indicating a growing convergence between traditional finance and blockchain-based payments.
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