Citigroup Explores Stablecoin Custody and Crypto ETF Infrastructure Amid Regulatory Shifts

Citigroup is assessing new opportunities in the digital asset space, including stablecoin custody, crypto ETF infrastructure, and blockchain-based payments, as the bank seeks to position itself at the forefront of the evolving financial landscape. Biswarup Chatterjee, global head of partnerships and innovation for Citi’s services division, stated that the bank is exploring custody services for the high-quality assets backing stablecoins, a development made possible by the newly enacted GENIUS Act. This legislation requires stablecoin issuers to hold reserves in safe assets such as U.S. Treasuries or cash, opening a potential avenue for traditional banks to provide custody solutions [1].

Citi’s services division, which includes treasury, cash management, and corporate payments, remains a strategic pillar as the bank restructures. Chatterjee highlighted that the bank is actively reviewing custody options for stablecoins, emphasizing the importance of ensuring that such assets are held securely and used for legitimate purposes. The bank is also considering issuing its own stablecoin, a move confirmed by CEO Jane Fraser during the Q2 earnings call. Fraser also noted Citi’s engagement in the tokenized deposit space, where the bank aims to modernize financial infrastructure and offer clients the benefits of stablecoin and digital asset advancements in a secure manner [1].

Beyond stablecoins, Citi is examining custody services for the crypto assets backing exchange-traded funds (ETFs). With the SEC’s approval of spot bitcoin ETFs last year, the market for such products has grown significantly, with BlackRock’s iShares Bitcoin Trust reaching a market cap of approximately $90 billion. Chatterjee pointed out that custody solutions are essential to support these ETFs, as they require the equivalent amount of digital currency to maintain their value. Currently, Coinbase dominates the ETF custody space, serving more than 80% of ETF issuers [1].

On the payments front, Citi already offers tokenized U.S. dollar transfers via blockchain between accounts in New York, London, and Hong Kong. The bank is now developing services that would allow clients to send stablecoins between accounts or convert them into dollars for payments. These innovations align with the broader trend toward real-time, 24/7 settlement systems and reflect Citi’s commitment to meeting evolving client needs.

Regulatory considerations remain a key focus, with Citi emphasizing the need to comply with anti-money laundering (AML) rules and international currency controls. Chatterjee stressed that custody operations must include robust cyber and operational security to ensure the integrity of digital assets.

As the largest stablecoin-issuing banks face regulatory scrutiny, major U.S. banking trade associations are advocating for expanded restrictions under the GENIUS Act. They argue that allowing stablecoin affiliates to offer interest on tokens could draw deposits away from traditional banks, limiting lending and increasing financial system fragility [1].

Citi’s digital asset strategy is part of a broader industry shift toward tokenization and real-time settlement. With $2.57 trillion in assets under custody, Citi’s potential role in stablecoin and crypto ETF custody could significantly influence how traditional finance integrates with the digital asset economy.

Source: [1] Cryptonews - [https://cryptonews.com/news/citigroup-weighs-stablecoin-and-crypto-etf-custody/](https://cryptonews.com/news/citigroup-weighs-stablecoin-and-crypto-etf-custody/)