Citigroup is taking significant steps towards expanding its presence in the digital asset market by actively exploring stablecoins and a new structure for payment services.
Expansion into Digital Assets
Citigroup is planning to enter the digital asset market, exploring new U.S. legislation that allows banks to issue stablecoins directly, provided they are backed by risk-free reserves like U.S. Treasuries or cash. This opens fresh opportunities for large banks like Citigroup to broaden their offerings in the regulated digital finance sector. Biswarup Chatterjee, Citigroup’s Global Head of Partnerships and Innovation, revealed that the bank may start by providing custody solutions for high-value collateral backing stablecoins.
Using Blockchain Technology
Citigroup is already utilizing blockchain technology to transfer tokenized U.S. dollars between its accounts in New York, London, and Hong Kong. These transfers are available 24/7 through the DTC platform, unlike traditional banking systems that operate within set hours. The next steps may allow customers to instantly move stablecoins from one account to another. Solutions for converting stablecoins into U.S. dollars for same-day settlements are also being developed.
New Opportunities under Regulation
Citigroup’s plans align with a more permissive regulatory environment. The GENIUS Act has created clarity and new definitions that will allegedly prompt major institutions to enter the game. Compliance with strict regulations will be crucial, including adherence to anti-money laundering laws and KYC measures. Citigroup is reportedly exploring its stablecoin offerings, placing it alongside banks like JPMorgan that have established their own tokens for institutional payments.
Citigroup's exploration of new opportunities in digital assets could significantly impact the market and reshape the direction of digital financial services. This expansion will not only deepen the bank's role in asset custody but also create new competitive conditions for other financial institutions.
