Citigroup, one of the leading U.S. banks, has announced plans to provide custody and settlement services for stablecoins and crypto ETFs, a move that follows recent legislative changes in the country.
Citigroup's Custody Plans
A senior executive from Citigroup stated to Reuters that the bank is focused on the custody of high-quality assets backing stablecoins while also exploring custody of digital assets for cryptocurrency investment products such as Bitcoin spot ETFs. "Custody of the high-quality assets backing stablecoins is the first option we are exploring," said Biswarup Chatterjee, head of global partnerships and innovation at Citigroup Services.
Use of Stablecoins for Payments
The bank also plans to use stablecoins to enhance speed and efficiency in cross-border payments, developing solutions for instant settlement. Currently, Citigroup operates a blockchain-based payment network for tokenized dollar transfers between New York, London, and Hong Kong, with new plans for stablecoin transfers and the capability to convert them to dollars for instant payments.
Legislative Changes and Current Market Status
Citigroup's actions follow sweeping policy changes in Washington, with U.S. Congress passing legislation that paves the way for widespread use of stablecoins in payments and settlements. The new law requires stablecoin issuers to be backed by safe assets, such as U.S. Treasury bonds or cash. Chatterjee stated that an equivalent amount of digital assets needs to be safely stored to support products like Bitcoin spot ETFs approved by the U.S. Securities and Exchange Commission.
In summary, Citigroup is positioning itself competitively in the growing cryptocurrency market while adapting to changes in regulations, suggesting new opportunities for both the bank and its clients.
