Financial institution Citigroup considers provision of custody services for stablecoins and cryptocurrency Exchange-Traded Funds (ETFs)
In a significant move, global financial giant Citigroup is set to offer custody and payment services for digital assets, with an initial focus on U.S. Treasuries and cash reserves that back regulated stablecoins. The announcement, made by Biswarup Chatterjee, global head of partnerships and innovation for Citi's services division, comes in response to recent U.S. legislation requiring stablecoin issuers to hold high-quality reserves [1][3].
The bank is also evaluating custody solutions for crypto exchange-traded products (ETPs), including Bitcoin and Ether ETFs, as traditional banks see opportunities to serve as custodians due to the U.S. legislation [1][2]. This move could potentially challenge the dominance of Coinbase in the digital asset custody sector.
Citigroup's entry into the digital asset space signals a significant institutional validation of digital asset custody and payment services. The bank aims to bridge traditional financial infrastructure with the evolving blockchain ecosystem [4].
The initial focus of Citi's digital asset services will be on safeguarding Treasuries held as reserves for stablecoins, ensuring compliance with the recent U.S. legislation requiring stablecoin issuers to hold sufficient high-quality reserves [1][3]. The bank is also exploring the provision of custody for the digital equivalents of assets tied to Bitcoin and Ether ETFs.
In addition, Citigroup is considering developing stablecoin-based payment and conversion services aimed at enabling faster transactions, building off the regulatory environment favoring stablecoins and crypto adoption [1][4][5].
Citigroup's foray into digital asset services follows discussions by its CEO about tokenized deposits and related services, and the bank already provides custody for tokenization projects outside the U.S., indicating growing institutional capability and interest in digital asset infrastructure [3].
This development is a testament to the evolving landscape of digital assets and the increasing institutional demand for custody and payment services in the space. As regulation continues to develop, we can expect to see more traditional financial institutions venturing into the digital asset sector.
[1] Reuters [2] Unchained Daily newsletter [3] The Block [4] CoinDesk [5] Fortune
Citigroup is evaluation custody solutions for crypto exchange-traded products (ETPs), including Bitcoin and Ether ETFs, indicating an interest in investing in digital asset markets. The bank aims to develop stablecoin-based payment and conversion services, demonstrating a commitment to incorporating technology in its financial services.
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