Citigroup Targets the Crypto Boom as Stablecoins and ETFs Surge

The fear of getting burned in the crypto market is slowly but surely fading. Where some saw a minefield of speculation, others like Citigroup see a giant testing ground. Boosted by clearer legislation, institutional investors are getting their hands on bitcoin like others do real estate. Banks are following suit: digital asset custody, ETFs, payments in stablecoins… The movement is underway.

Stablecoins, ETFs and Custody: Citigroup Strengthens Its Game

Citigroup has never done anything by halves. When it enters crypto, it targets the backbone: custody. And not just any custody. First, that of the reserves backing the stablecoins, linked to safe assets like US Treasury bonds or cash.

Biswarup Chatterjee, head of partnerships at Citi, sums up: “Providing custody services for those high-quality assets backing stablecoins is the first option we are looking at“.

But Citi doesn’t stop there. The bank is also eyeing custody of crypto ETFs, those financial products backed by bitcoin or ether. BlackRock, with its 88 to 90 billion dollars under management via IBIT, leads the pack. But for these ETFs to hold up, the BTC must be safely stored somewhere. 

For now, Coinbase is taking the lion’s share, but Citigroup intends to reshuffle the cards.

And for those who think Citi is new to blockchain, think again. It is already working with SIX Digital Exchange in Switzerland, aiming to tokenize private market assets. Its goal? To make these securities as fluid as a simple bank transfer.

Crypto and the Race for Instant Payments: Towards a New Banking Order?

Between ETFs and tokenization, Citigroup is pushing its pawns on another front: payments. And not just any payments. Tokenized dollar transfers, available 24/7 between its hubs in New York, London, and Hong Kong. A revolution when you know the slowness of the traditional banking system.

This project goes even further: enabling its clients to instantly transfer stablecoins or convert them directly into dollars. Something to give wings to businesses tired of waiting several days for an international settlement. And according to Chatterjee, discussions with clients are well advanced on these concrete uses.

US legislation also plays its part. The GENIUS Act, recently passed, requires each stablecoin to be backed 1:1 by safe assets. For Citigroup, it’s a godsend: it has the vaults, licenses, and expertise. And if the bank issues its own stablecoin, like JPMorgan with JPM Coin, it could quickly become essential.

This digital turn, assumed and prepared, places Citi on a trajectory that disrupts crypto giants like Coinbase, but also fintechs, which will have to reckon with this old Wall Street wolf.

What to remember from Citi’s crypto strategy:

• $250 billion: estimated volume of stablecoins in circulation, according to McKinsey. A windfall to secure;
• 1.3 million BTC: held by US Bitcoin ETFs, representing 6.2% of total supply. Source: Bitbo;
• More than 80% of crypto ETFs: currently held by Coinbase. Citi wants to challenge this dominance;
• $5,000 billion by 2030: market size estimate of tokenization according to Citigroup;
• 24/7 blockchain network: already active for tokenized dollar payments within Citi subsidiaries.

Citigroup is not the type of bank to cling to the pillars of traditional finance. It has already embraced blockchain, ETFs, and artificial intelligence. But at a time when America is legislating on the digital dollar, the giant has chosen its side: no programmable central currency. The CBDC was snubbed, a decision assumed like a declaration of independence from the platform-state.