Citigroup Eyes Stablecoin Custody and Payment Services Amid Policy Shift

Traditional banking giant considers custody, payments, and ETF-linked services as stablecoin regulation reshapes the crypto landscape.

Citigroup is exploring offering custody and payment services for stablecoins, signaling how fast U.S. financial institutions are moving into digital assets after Congress passed landmark stablecoin legislation. The new law requires issuers to back tokens with safe assets like U.S. Treasuries or cash, opening the door for traditional banks to manage and safeguard those reserves.

This development could transform Citi’s role in digital finance. According to Biswarup Chatterjee, global head of partnerships and innovation for Citigroup’s services division, custody of Treasuries and cash behind stablecoins is the bank’s first focus. He explained that Citi’s services business — which already handles treasury, cash management, and payments for large companies — is well-positioned to take on this responsibility.

Policy Changes Ignite Stablecoin Expansion

The congressional move has already boosted interest in stablecoin issuance among companies like Fiserv and Bank of America. By requiring strong backing and regulatory oversight, the law aims to make stablecoins a safer, more widely accepted payment option.

McKinsey estimates around $250 billion in stablecoins are currently in circulation, primarily used for crypto trading. However, with regulatory clarity, their role could expand into mainstream payments and settlements. This is where banks like Citi see opportunity.

Chatterjee noted: “Providing custody services for those high-quality assets backing stablecoins is the first option we are looking at.”

Stablecoin Custody and Crypto ETFs

Citigroup is also considering custody services for the digital assets supporting crypto ETFs. Since the U.S. Securities and Exchange Commission approved spot Bitcoin ETFs in 2023, demand for reliable custody has surged.

BlackRock’s iShares Bitcoin Trust, for instance, now has about $90 billion in market capitalization. Each ETF unit must be backed by digital currency, creating a massive need for custodial solutions. At present, Coinbase dominates this market, serving as custodian for more than 80% of issuers. Citi’s potential entry could diversify the field and bring institutional credibility.

Payments Innovation with Stablecoins

Beyond custody, Citigroup is exploring stablecoin payments as a way to accelerate transactions. Traditional bank transfers can take days, but stablecoins can enable near-instant settlement.

Currently, Citi offers tokenized U.S. dollar payments on blockchain, allowing transfers between New York, London, and Hong Kong around the clock. The bank now plans to expand this by enabling clients to send stablecoins between accounts or convert them instantly into dollars.

This could revolutionize how multinational companies manage liquidity and cross-border payments, reducing both cost and friction.

Balancing Regulation and Innovation

While U.S. regulators are adopting a more open stance toward digital assets, Citi and other banks must still comply with existing rules. These include strict anti-money laundering standards and currency controls for international transfers.

Chatterjee emphasized that custodians must ensure all crypto assets are legitimate before holding them. He also stressed the need for strong cybersecurity and operational safeguards. Furthermore, Citi is even considering issuing its own stablecoin in the future — a move that would place it among the few major banks directly launching a token.

A Strategic Pivot for Citi

Citigroup’s exploration of stablecoin custody and payment services underscores a broader shift in traditional banking. By entering this space, Citi not only aligns itself with regulatory change but also positions itself as a leader in digital finance.

If successful, the bank could become a trusted bridge between traditional finance and the fast-growing stablecoin ecosystem, offering services that combine institutional reliability with blockchain speed.

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