Citigroup Eyes Stablecoin Custody and Payment Solutions Amid Regulatory Shift
Citigroup explores stablecoin custody, payments, and ETF asset services, leveraging new U.S. regulations to expand its digital finance footprint.
Citigroup is weighing an expansion into stablecoin custody and payment services, reflecting a broader trend among major financial institutions responding to the United States' evolving regulatory landscape for digital assets.
Speaking to Reuters, Biswarup Chatterjee, Citigroup's global head of partnerships and innovation for its services division, confirmed that providing custody for high-quality assets backing stablecoins is the bank's primary consideration. These assets, under a new federal law, must be safe holdings such as U.S. Treasuries or cash, creating an opportunity for traditional banks to step in as trusted custodians.
"Providing custody services for those high-quality assets backing stablecoins is the first option we are looking at," Chatterjee noted. Citi's services division, encompassing treasury, payments, and cash management for large corporations, remains central to the bank's restructuring strategy.
The legislative shift—part of a broader crypto-friendly policy environment under President Donald Trump's administration—has opened the door for stablecoins to be widely used for payments, settlements, and other financial services. McKinsey estimates that roughly $250 billion in stablecoins have been issued to date, though their usage has largely been confined to cryptocurrency trading settlements.
Citi is also considering offering custody solutions for digital assets linked to crypto-focused investment products, such as spot bitcoin ETFs. Since the U.S. Securities and Exchange Commission approved these products last year, leading funds like BlackRock's iShares Bitcoin Trust have amassed significant market capitalizations, requiring secure custody of the underlying assets.
Currently, Coinbase dominates the crypto ETF custody space, serving over 80% of issuers. Citi's entry into the sector could reshape the competitive landscape, especially if it leverages its global reach and banking expertise.
Beyond custody, Citigroup is exploring using stablecoins to accelerate payment processing. The bank already offers "tokenized" U.S. dollar transactions across New York, London, and Hong Kong around the clock. It now aims to develop services enabling clients to send stablecoins directly between accounts or convert them to dollars for instant payments.
While the regulatory mood in Washington has warmed, Citi acknowledges that compliance remains critical, particularly regarding anti-money laundering measures, currency controls, and cross-border transfer regulations. Strengthening cybersecurity and operational safeguards is also a priority to prevent theft and ensure asset legitimacy.
The bank has not ruled out issuing its own stablecoin, a move that would place it alongside other traditional institutions entering the digital currency arena. For Citi, the strategy represents not just a technological upgrade, but a bid to remain competitive in a rapidly digitizing financial ecosystem.
