Wall Street Bets Big on Stablecoins as $4 Trillion Era Kicks Off

Citigroup's venture arm, Citi Ventures, has made a strategic investment in stablecoin infrastructure firm BVNK, signaling a significant shift in Wall Street's approach to digital assets. The investment follows a regulatory environment increasingly favorable to stablecoins, particularly in the U.S., where the GENIUS Act has provided clarity on compliance, reserves, and redemption requirements. BVNK, which processes over $20 billion in payments annually and partners with entities like Worldpay and Flywire, operates a global payments rail for stablecoins, enabling low-cost, 24/7 cross-border transactions. Citi's move aligns with its broader strategy to position itself at the forefront of the stablecoin-driven payments revolution, as highlighted by Citi Ventures head Arvind Purushotham, who noted growing demand for on-chain and crypto asset settlement.

The investment comes as Citi revises its stablecoin market forecasts upward, projecting a $1.9 trillion base case and $4 trillion bull case by 2030. This revision reflects rapid adoption, with stablecoin transactions nearing $10 trillion over the past year and the sector's current market cap exceeding $280 billion. The bank attributes this growth to the GENIUS Act, which has spurred institutional confidence, and the inherent advantages of stablecoins-such as speed, low cost, and 24/7 settlement-making them a compelling alternative to traditional payment systems. Citi's CEO, Jane Fraser, has also indicated the bank is exploring its own stablecoin and tokenized deposit offerings, emphasizing the need to modernize infrastructure to meet client needs.

The regulatory clarity provided by the GENIUS Act has been a catalyst for broader industry participation. The law mandates that stablecoin issuers maintain 1:1 reserves in cash or short-term Treasuries, submit to audits, and adhere to anti-money laundering rules. While the act prohibits stablecoin issuers from paying interest, it allows exchanges to offer rewards on stablecoin holdings, a nuance that has sparked debate between traditional banks and crypto advocates. Citi's investment in BVNK, alongside Visa's earlier backing, underscores the growing consensus that stablecoins can coexist with traditional financial systems, offering complementary infrastructure rather than direct competition.

Major U.S. banks are accelerating their stablecoin strategies. JPMorgan, for instance, has launched its tokenized deposit coin (JPMD) and plans to expand stablecoin capabilities despite CEO Jamie Dimon's initial skepticism. Bank of America is also developing tokenized deposit systems, while Citigroup has confirmed plans to tokenize deposits and issue its own stablecoin. These moves reflect a defensive strategy as institutions seek to retain market share in a landscape where stablecoins increasingly handle supply chain payments and liquidity management. The shift is further supported by Treasury Secretary Scott Bessent, who has highlighted stablecoins' potential to expand global dollar access and boost demand for U.S. Treasuries as backing assets.

The competitive landscape is intensifying, with fintechs and legacy players vying for dominance. BVNK, backed by Citi and Visa, competes with firms like Alchemy Pay, TripleA, and Ripple, all targeting the cross-border payments market. Meanwhile, crypto-native platforms such as Coinbase and Circle are leveraging their stablecoin reserves to offer yield-bearing incentives, attracting users away from traditional savings accounts. Despite concerns from banking groups about deposit outflows, Citi's analysis suggests stablecoin adoption has not significantly impacted community banks' deposits over the past five years. The bank's updated forecasts, however, assume a scenario where stablecoins could facilitate up to $200 trillion in transactions annually by 2030, depending on velocity and regulatory developments.

As the stablecoin market matures, its role as a bridge between traditional finance and blockchain is becoming clearer. Citigroup's investment in BVNK, combined with regulatory advancements and institutional adoption, signals a pivotal moment in the evolution of digital payments. While challenges remain-such as balancing innovation with systemic risk-the trajectory points to a future where stablecoins and bank tokens coexist, each serving distinct niches in a reimagined financial infrastructure.

Source: [1] CoinDesk (https://www.coindesk.com/business/2025/10/09/citi-joins-visa-in-backing-stablecoin-payments-company-bvnk)

[2] CoinDesk (https://www.coindesk.com/business/2025/09/25/stablecoin-market-could-reach-usd4-trillion-by-2030-citi-says-in-revised-forecast)

[3] CNBC (https://www.cnbc.com/2025/10/09/biti-bvnk-stablecoin-banks-crypto.html?msockid=20c0b78a9e4a65ba376da10a9fa664ca)

[4] Wired (https://www.wired.com/story/genius-act-loophole-stablecoins-banks/)

[5] CoinCentral (https://coincentral.com/citigroup-and-jpmorgan-enter-stablecoin-market-as-genius-act-approaches-vote/)

[6] LinkedIn (https://www.linkedin.com/pulse/genius-act-becomes-law-us-backs-stablecoin-clarity-jpmorgan-launches-qu0ue)