Amid pro-crypto policies emerging from the US Congress toward crypto assets, American multinational investment bank, Citigroup, is contemplating the introduction of stablecoin custody services and crypto-focused exchange-traded funds (ETFs).
Citigroup’s Goal For Crypto
Biswarup Chatterjee, Citigroup’s global head of partnerships and innovation for its services division, indicated that the bank is primarily focused on providing custody services for the high-quality assets that support stablecoins.
In a recent interview with Reuters, he emphasized the importance of this initiative within Citi’s broader services business, which encompasses treasury management, cash management, and payment solutions for large corporations.
Although Citigroup had previously mentioned its interest in potentially launching its own stablecoin, the bank has not elaborated on its comprehensive plans for digital assets until now.
In addition to stablecoin custody, Citigroup is also exploring services for managing digital assets that underlie crypto-related investment products. According to Reuters, the rise of ETFs that track Bitcoin’s (BTC) spot price has created an increasing need for custody services.
The largest of these ETFs, BlackRock’s iShares Bitcoin Trust (IBIT), boasts a market capitalization of around $90 billion, necessitating secure management of an equivalent amount of digital currency to support these financial products.
Currently, Coinbase dominates the custody business for crypto exchange-traded funds, serving as custodian for over 80% of their issuers.
Citigroup aims to carve out its own niche in this sector, with plans to leverage stablecoins to enhance the speed of payments, which in traditional banking can often take several days or more.
Considering The Creation Of Its Own Stablecoin
Per the report, Citi’s current offerings include “tokenized” US dollar payments that utilize a blockchain network to facilitate transactions around the clock between accounts in major financial hubs like New York, London, and Hong Kong.
The bank is working on developing services that would allow clients to transfer stablecoins between accounts or convert them into dollars for instant payments. Chatterjee noted that discussions with clients are ongoing to explore various use cases for these services.
The regulatory landscape for cryptocurrency has shifted under the Trump administration, which took a more lenient approach to the expansion of traditional financial institutions into the crypto space.
However, Reuters highlights that Citigroup and its peers will still need to navigate existing regulations, including those related to anti-money laundering (AML) and currency controls, particularly for international transactions.
Chatterjee emphasized the importance of ensuring that crypto assets used in custody services are sourced from legitimate origins, as well as the necessity of bolstering cybersecurity and operational protocols to protect against theft.
The potential issuance of a stablecoin by Citigroup is also being considered, signaling the bank’s commitment to adapting to the cryptocurrency industry.
Featured image from DALL-E, chart from TradingView.com
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