Citigroup Explores Payment Services and Custody for Crypto ETFs, Stablecoins

US bank Citigroup is considering offering services tied to stablecoins, including custody solutions, according to one of its senior executives. The bank joins a list of major traditional players, including Bank of America and Fiserv, looking to step further into the crypto space.

The renewed interest follows a recent law passed by Congress that provides a framework for stablecoins to be used in everyday payments, settlement systems, and other financial services.

Stablecoins are a form of crypto that track the value of a traditional asset, most often the USD. Under the new law, issuers are required to back these tokens with reliable holdings such as cash or U.S. Treasuries. That requirement creates a natural opening for traditional custodians, who are already well-positioned to safeguard and manage such assets.

Biswarup Chatterjee, who heads partnerships &innovation for Citi’s services unit, explained that holding those backing assets is the first area the bank is studying. Citi’s services arm, which handles treasury operations, payments, cash management, and related functions for large corporations, has remained central to the bank even as it undergoes a broad restructuring.

According to research from McKinsey, roughly $250 billion worth of stablecoins have been issued to date, though most of them are currently used to settle crypto transactions.

While the bank previously revealed it was evaluating the possibility of having its own stablecoin, this is among the first times it has outlined its wider ambitions in digital assets.

Beyond stablecoins, Citi is also assessing custody for assets that support crypto investment products. Since the SEC approved crypto spot exchange-traded funds (ETFs), asset managers have launched several offerings. At present, Coinbase is the dominant provider of custody services for crypto ETFs, handling over 80 percent of issuers.

The bank is also examining ways stablecoins could shorten settlement times for payments, which in conventional banking can take days. Currently, the bank provides a tokenized USD payment system using blockchain technology, allowing round-the-clock transfers between its accounts in Hong Kong, New York, and London.

Plans are underway to expand this into services where clients can move stablecoins across accounts or instantly convert them into dollars for immediate payments. Discussions with corporate customers about potential applications are ongoing.

While U.S. regulators under the Trump administration have become more open to traditional firms operating in the crypto arena, Citigroup and others still face compliance hurdles. These include rules covering money laundering, currency controls, and cross-border transfers.

As regulations around these areas are revised to accommodate crypto, the economic landscape is expected to shift considerably for various traditional finance entities and even for crypto companies like Bit Digital Inc. (NASDAQ: BTBT).

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