Citi plans entry into crypto with stablecoin and ETF custody services, aiming to offer secure digital asset solutions globally.
Citigroup, a major global bank, is planning to enter the cryptocurrency market. The bank is considering offering custody services for stablecoins and crypto exchange-traded funds (ETFs). This step is a major initiative by Citi in its efforts to explore the digital assets market, which is ever-growing. According to Reuters, Citi is now emphasizing high-quality avenues that support stablecoins and digital assets that are related to products such as bitcoin spot ETFs.
Citi to Offer Custody for Stablecoins Backed by Cash, Treasuries
Citi is first focusing on custody services for stablecoins. Stablecoins are cryptocurrencies that are pegged to other stable bodies, such as the US dollar, to retain their value. The bank desires to safely store the quality reserves, including US Treasuries or cash, which back up these stablecoins. This emphasis is in tandem with the new US laws. As an example, the GENIUS Act, which has been signed by President Donald Trump, establishes stringent federal requirements for stablecoin issuers. It asks them to maintain credible reserves, and this makes them stable and credible in these digital currencies.
Also, Citi is looking into custody of digital assets related to crypto ETFs. Spot bitcoin ETFs are growing in popularity in the US. At the moment, Coinbase controls this market, being the custodian of more than 80 per cent of the US-based crypto ETFs. But with its entry, Citi may threaten the leadership of Coinbase. As a provider of safe custody services of ETF-related digital assets, Citi seeks to appeal to customers who want reliable financial organizations in the cryptocurrency industry.
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In addition, Citi is working on the creation of payment services based on stablecoins. The bank regards stablecoins as an effort to enhance cross border payments. Such online currencies have the capacity of making transactions quicker and less expensive than the conventional banking system. Indicatively, Citi is already experimenting with blockchain-enabled transfer of US dollars between New York, London, and Hong Kong accounts. The bank is currently developing the services to transfer or convert stablecoins to instant settlement. This has the potential to make the international payment more efficient by businesses and individuals.
Citi Explores Crypto Custody Despite Market, Regulatory Challenges
Biswarup Chatterjee, who leads global partnerships and innovation at Citi, spoke about the bank’s future direction. He stated that the bank is initially contemplating on provision of custody services to the assets that underlie the stablecoins. His remarks indicate that Citi is being cautious yet strategic with respect to its move into the cryptocurrency market.
However, there are challenges associated with the move of Citi. The crypto market is a highly competitive environment, and already, established companies, such as Coinbase, have gained significant positions in the market. In addition, regulatory oversight in the US and around the world might affect the plans of Citi. In spite of these challenges, Citi reputation of being a reputable financial institution may help it gain an advantage in winning customers.
To sum up, the discovery of crypto custody and payment products by Citigroup indicates a daring venture into digital finance. The bank will target stablecoins and ETFs to address the increasing demand on secure and effective crypto products. As Citi creates these services, it may transform what traditional banks are in the world of cryptocurrencies. In addition to competing with rivals, this step is in tandem with the changing environment of international finance.
