Citigroup Eyes Crypto Custody for ETFs, Stablecoins
Citigroup Considers Crypto Custody Services
Citigroup, one of the largest U.S. banks with approximately $2.5 trillion in assets under management (AuM), is reportedly exploring crypto custody services. This move includes potential stablecoin offerings, spurred by evolving regulatory landscapes.
Plans for Custody and Stablecoin Integration
A Reuters report quoted Biswarup Chatterjee, Citigroup’s global head of partnerships and innovation, confirming the exploration of stablecoin custody and related services. Initially, the focus is on providing custody for high-quality assets backing stablecoins.
Expanding into Crypto ETF Custody
Citigroup is also considering custody solutions for crypto ETFs, including Bitcoin and Ethereum ETFs. The aim is to mirror roles currently held by major crypto exchanges like Coinbase, which manages custody for about 80% of U.S. crypto ETFs.
Chatterjee highlighted the scale of Bitcoin ETFs, noting that BlackRock’s IBIT holds over $90 billion in assets. This necessitates robust digital currency custody to support these ETFs.
This initiative reflects a broader trend of traditional finance (TradFi) firms entering the crypto space. Recently, JPMorgan and PNC Bank partnered with Coinbase to offer crypto services, with JPMorgan also planning crypto-backed loans.
Stablecoins for Payments
Citigroup is also examining the use of stablecoins to expedite payments, which typically take several days via traditional banking systems. The bank has been considering issuing its own stablecoin, similar to moves by JPMorgan and Bank of America.
The bank already offers tokenized U.S. dollar payments, facilitating currency transfers between accounts using blockchain. Citigroup is developing services to allow clients to send stablecoins between accounts or convert them to fiat for instant payments.
Security and Compliance
Citigroup emphasizes the need to ensure crypto assets are used for legitimate purposes and intends to bolster cyber and operational security to prevent theft. Other financial institutions are also providing crypto custody, such as BNY Mellon’s partnership with Ripple to custody dollar reserves for its RLUSD stablecoin.