Citigroup Explores Stablecoin Custody and Payment Services Amid US Crypto Policy Shift
Citigroup is considering offering custody and other services for stablecoins, a senior executive told Reuters, highlighting how new U.S. regulations are encouraging major banks to expand into the cryptocurrency sector.
The U.S. banking giant joins firms like Fiserv and Bank of America in exploring stablecoin opportunities after Congress passed legislation enabling these tokens to be widely used for payments, settlements, and other financial services. Stablecoins are cryptocurrencies pegged to a fiat currency, most commonly the U.S. dollar.
New Law Creates Opportunities for Custody Banks
The new law requires stablecoin issuers to hold high-quality assets such as U.S. Treasuries or cash to back their tokens. This opens the door for traditional custody banks to safeguard and manage those reserves.
“Providing custody services for the high-quality assets backing stablecoins is the first option we are looking at,” said Biswarup Chatterjee, Citigroup’s global head of partnerships and innovation for its services division. Citi’s services unit — which includes treasury, cash management, and payments for large corporations — remains a core business as the bank undergoes a major restructuring.
Digital Asset and ETF Custody Under Review
According to McKinsey, roughly $250 billion in stablecoins have been issued, though most are currently used to settle crypto trades. While Citi said last month it may issue its own stablecoin, it has not previously detailed broader digital asset plans.
The bank is also assessing custody services for assets backing crypto-related investment products, such as ETFs. Since the SEC approved spot bitcoin ETFs last year, major asset managers have launched products like BlackRock’s iShares Bitcoin Trust, which has a market capitalization of about $90 billion. “There needs to be custody of the equivalent amount of digital currency to support these ETFs,” Chatterjee noted.
Currently, Coinbase dominates this market, serving as custodian for over 80% of crypto ETF issuers.
Stablecoins for Faster Payments
Citi is also exploring stablecoin-based payment solutions that could settle transactions instantly, compared to the traditional banking system’s multi-day timelines. The bank already offers “tokenized” U.S. dollar payments on a blockchain network between New York, London, and Hong Kong, and is developing services that would allow clients to transfer stablecoins or convert them to dollars for immediate payments.
Regulatory Shifts and Compliance
Under U.S. President Donald Trump’s crypto-friendly administration, regulators have adopted a more open stance toward banks engaging in digital assets. However, Citi and other institutions must still comply with anti-money laundering laws, currency controls, and international transfer regulations.
Chatterjee stressed that crypto asset custody must verify legitimate asset origins and ensure strong cyber and operational security to prevent theft. He also confirmed that issuing a Citi-backed stablecoin remains under consideration.
