Citigroup Explores Stablecoin Custody and Crypto ETF Services in Digital Expansion

Citigroup is exploring the provision of custodial services for stablecoins and cryptocurrency exchange-traded funds (ETFs), signaling a potential expansion into the digital asset market. The bank has begun testing blockchain-based tokenized dollar payments for 24/7 global transfers and is experimenting with direct stablecoin settlements to enable faster transactions [1]. The initiative is part of a broader strategy to offer custody, payment, and conversion services for digital assets, driven by increasing demand and evolving regulatory clarity [2].

Biswarup Chatterjee, Citi’s head of innovation, has highlighted the rising interest in stablecoins due to regulatory requirements that now mandate issuers to hold low-risk assets such as U.S. Treasury bonds or cash. This creates a potential opportunity for Citi to provide custodial and settlement services to corporate clients, enhancing efficiency and trust in digital transactions [3].

The bank is also considering issuing its own stablecoin, with a strong emphasis on legal compliance, cybersecurity, and secure digital asset storage. Such a move would align with the bank’s ongoing efforts to integrate digital assets into its core services while adhering to stringent anti-money laundering and foreign exchange regulations [4].

In the ETF space, Citi is eyeing custody services for digital assets linked to investment products, including spot Bitcoin ETFs, which are seeing strong capital inflows. The BlackRock iShares Bitcoin Trust, for instance, has reached a market capitalization of approximately $89 billion. By offering institutional-grade custody solutions, Citi could challenge current market leaders and provide a more scalable infrastructure for managing crypto-backed investments [5].

Analysts suggest that Citi’s potential entry into the crypto custody market could encourage other financial institutions to explore similar opportunities, further legitimizing the space. However, the regulatory environment remains complex, and any direct engagement with digital currencies will require careful compliance and risk management [6].

As Citigroup continues to evaluate its options, the bank’s approach reflects the broader trend of traditional financial institutions adapting to the growing prominence of digital assets. By positioning itself as a custodial and settlement provider in the crypto and stablecoin markets, Citi may help bridge the gap between conventional finance and the emerging digital asset ecosystem.

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Source: [1]title1...................(https://www.cryptopolitan.com/citigroup-weighs-stablecoin-custody/)

[2]title2...................(https://www.inkl.com/news/citi-s-crypto-custody-gambit-puts-blockchain-etfs-in-the-spotlight)

[3]title3...................(https://menafn.com/1109931507/Citigroup-Considers-Crypto-Custody-Amid-Rising-ETF-And-Stablecoin-Popularity)

[4]title4...................(https://bitcoinworld.co.in/citigroup-digital-services/)