Citigroup, a fixture of Wall Street, is weighing entry into cryptocurrency custody and payment solutions. Buoyed by clearer rules shaped in the Trump era and a friendlier legislative environment, the bank is positioning itself to capitalise on the sector’s rapid growth.
Citigroup’s Strategic Focus
Biswarup Chatterjee, a Citigroup executive, revealed that the bank’s initial focus will likely be on custody services for “high-quality assets backing stablecoins.” This move aligns with Citigroup’s broader strategy to enhance its services division, which handles treasury, payments, and cash management for large corporations.
Crypto-Linked ETFs and Stablecoins
Citigroup is also exploring custody offerings for crypto-linked exchange-traded products (ETPs), including Bitcoin and Ether ETFs. Chatterjee emphasised the necessity of digital currency custody to support these ETFs. Since their launch in early 2024, Bitcoin ETFs have gained popularity. Data from Bitbo shows that 12 US spot Bitcoin ETF issuers now hold nearly 1.3 million BTC, representing about 6.2% of the total circulating supply.
BlackRock’s iShares Bitcoin Trust (IBIT) leads the pack with an estimated market value of $88 billion. The recent surge in BTC prices has driven inflows into US spot Bitcoin ETFs, reaching new all-time highs. Ether ETFs have also gained traction, with BlackRock’s Ethereum fund becoming the third-fastest to reach $10 billion in assets.
Citigroup’s Crypto Ventures
This isn’t Citigroup’s first foray into the crypto realm. Earlier this year, the bank partnered with Switzerland’s SIX Digital Exchange to leverage blockchain technology for private markets through tokenisation. Citigroup has been eyeing tokenisation since 2023, predicting it could reach a $5 trillion market valuation by 2030.
Citigroup was also reportedly among several Wall Street giants, including JPMorgan and Bank of America, exploring the issuance of a joint stablecoin.
Regulatory Tailwinds
TradFi has gained confidence from moves to bring clearer rules to the crypto industry. Support has come from both the US Securities and Exchange Commission and the recent approval of the GENIUS Act, a landmark stablecoin law. In July, the House of Representatives advanced several measures, among them the CLARITY market structure bill and the GENIUS Act.
*Disclaimer: This article is for informational purposes only and does not constitute financial advice.*
