Citigroup eyes custody and payment services for crypto ETFs, stablecoins

Citigroup is looking to make a further foray into the crypto and blockchain ecosystem with custody and payments solutions for stablecoins and crypto exchange-traded funds.

The U.S. banking giant is considering a move into crypto custody, stablecoin payments, and other services as leading banks and financial institutions increasingly embrace crypto.

In a report, Reuters cites a top executive at Citigroup as saying the bank wants to tap into the crypto momentum as Washington signals a pro-crypto regulatory shift. Bank of America, Morgan Stanley, JP Morgan, and Fiserv are among the top financial firms taking an aggressive approach to their expansion into the cryptocurrency space.

The landmark stablecoin law and other regulatory guidelines, including for banks, have helped spotlight the opportunity across stablecoins and crypto custody. 

“Providing custody services for those high-quality assets backing stablecoins is the first option we are looking at,” said Biswarup Chatterjee, global head of partnerships and innovation at Citigroup. 

Citigroup eyes crypto ETFs custody market

Citi already offers a tokenized asset solution, using blockchain for U.S. dollar payments and transfers between bank accounts in London, New York, and Hong Kong. The service allows for 24-hour transfers.

As well as stablecoins, Citi plans to enter the crypto exchange-traded funds as a custody service provider. 

This area of the rapidly expanding digital asset market has received notable traction since the Securities and Exchange Commission approved the first spot crypto ETF with Bitcoin (BTC) spot ETFs in 2024. Demand has pushed the total net assets in spot Bitcoin ETFs to over $158.6 billion, with the largest BTC ETF being the BlackRock iShares Bitcoin Trust with $91 billion in net assets. 

Other issuers include Fidelity Investments, Grayscale, Ark & 21Shares and Bitwise.

“There needs to be custody of the equivalent amount of digital currency to support these ETFs,” Chatterjee added in an interview.

Citi’s plans will see it enter a market currently dominated by U.S.-based crypto exchange Coinbase.

The crypto behemoth serves as custodian for over 80% of the existing crypto ETFs. Citi and State Street first revealed plans to enter the crypto custody space in February, coinciding with Citi’s launch of the CIDAP digital asset platform.