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TLDR
- Citigroup is exploring cryptocurrency custody and payment services, focusing first on stablecoin-backed assets
- The bank is also considering custody offerings for crypto ETFs like Bitcoin and Ethereum
- Bitcoin ETFs have grown significantly since early 2024, with BlackRock’s fund now worth around $88 billion
- Citi previously partnered with Switzerland’s SIX Digital Exchange for blockchain tokenization
- Recent pro-crypto regulatory developments including the GENIUS Act have encouraged traditional financial institutions
Citigroup is exploring cryptocurrency custody and payment services as part of its strategy to capitalize on the growing digital asset market. The Wall Street giant is looking to expand its offerings at a time when cryptocurrency adoption is accelerating among traditional financial institutions.
Biswarup Chatterjee, global head of partnerships and innovation at Citigroup, told Reuters that the bank’s initial focus would likely be custody services for “high-quality assets backing stablecoins.” This move comes as Washington signals a more pro-crypto regulatory stance.
The bank is also considering custody offerings for crypto-linked exchange-traded products. These could include Bitcoin and Ethereum exchange-traded funds (ETFs), which have seen tremendous growth since their introduction.
“There needs to be custody of the equivalent amount of digital currency to support these ETFs,” Chatterjee explained in an interview. This insight highlights the operational requirements behind these investment vehicles.
Bitcoin ETFs have experienced a surge in popularity since their debut in early 2024. According to market data, the 12 US spot Bitcoin ETF issuers now hold nearly 1.3 million BTC.
This represents about 6.2% of the total circulating supply of Bitcoin. BlackRock’s iShares Bitcoin Trust (IBIT) has emerged as the market leader with an estimated value of around $88 billion.
Market Growth Drives Banking Interest
Ethereum ETFs have also seen impressive growth after a slower start. BlackRock’s Ethereum fund has become the third-fastest in history to reach $10 billion in assets under management.
The total net assets in spot Bitcoin ETFs now exceed $158.6 billion. This rapid expansion has created new opportunities for financial service providers like Citigroup.
Citigroup’s exploration of custody and payment services isn’t its first venture into the cryptocurrency space. Earlier this year, the bank partnered with Switzerland’s SIX Digital Exchange to leverage blockchain technology.
This partnership aims to improve private markets through tokenization. Citi has been interested in tokenization since at least 2023, when it described the technology as the next “killer use case” in crypto.
The bank estimated that tokenization could reach a $5 trillion market valuation by 2030. This projection shows Citi’s long-term vision for blockchain technology beyond just cryptocurrencies.
Citi was also reportedly among several Wall Street giants exploring the possibility of issuing a joint stablecoin. This group included JPMorgan, Wells Fargo, and Bank of America.
Regulatory Environment Improving
A recent report ranked Citigroup among the most active institutional investors in blockchain companies. The bank completed 18 deals between 2020 and 2024, showing consistent interest in the sector.
Traditional financial institutions have been encouraged by recent regulatory developments. The Trump administration’s efforts to provide clarity for the crypto sector have extended to various regulatory bodies.
In July, the House of Representatives passed several crypto-friendly bills. These included the CLARITY market structure bill, the Anti-CBDC Surveillance State Act, and the GENIUS Act for stablecoins.
Citi already offers a tokenized asset solution that uses blockchain for US dollar payments and transfers. This service operates between bank accounts in London, New York, and Hong Kong, allowing for 24-hour transfers.
If Citi enters the crypto ETF custody market, it will compete with established players like Coinbase. The US-based crypto exchange currently serves as custodian for over 80% of existing crypto ETFs.
Citi and State Street first revealed plans to enter the crypto custody space in February. This announcement coincided with Citi’s launch of the CIDAP digital asset platform.
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