Citigroup Eyes Custody, Payment Services for Stablecoins, Crypto ETFs

Citigroup has said it is considering offering custody and payment services for stablecoins and crypto-backed exchange-traded funds (ETFs) as Wall Street accelerates its entry into the fast-expanding digital assets market.

A senior Citi executive told Reuters that the new U.S. regulatory framework, which mandates stablecoin issuers to back tokens with safe assets like U.S. Treasuries and cash, is creating opportunities for traditional banks to play a stronger role in the ecosystem.

Citi’s global head of partnerships and innovation for its services division, Biswarup Chatterjee, said, ‘Providing custody services for those high-quality assets backing stablecoins is the first option we are looking at.’

The bank’s services unit, which covers treasury, payments and cash management for large corporates, remains a key part of its restructuring drive. Stablecoins, which are digital tokens pegged to fiat currencies such as the U.S. dollar, are gaining traction as payment and settlement instruments. According to McKinsey, about $250 billion worth of stablecoins have been issued globally, though most are currently used for crypto trading settlements.

Citi is also considering offering custody for digital assets tied to investment products, including bitcoin ETFs. Since U.S. regulators approved spot bitcoin ETFs last year, fund managers such as BlackRock have rolled out products now commanding tens of billions in assets. BlackRock’s iShares Bitcoin Trust alone holds about $90 billion.

Currently, Coinbase dominates custody for crypto ETFs, serving over 80 per cent of issuers, but Citi’s possible entry signals intensifying competition in the space. The U.S. bank is further exploring the use of stablecoins to speed up cross-border payments. While Citi already offers blockchain-based “tokenised” dollar transfers between accounts in New York, London and Hong Kong, it is developing services that would allow clients to send stablecoins or instantly convert them to cash.

Chatterjee noted that Citi would ensure strong compliance with anti-money laundering and cybersecurity standards as it expands into the digital assets space.

He added that the possibility of issuing its own stablecoin also remains under review