Citigroup to Embrace Stablecoins and Crypto ETFs as Regulations Ease

Key Highlights

• Citigroup explores custody for stablecoins and crypto exchange-traded funds

• Joining the latest trend, as many financial institutions are testing instant transfers via stablecoins
• New rules make digital assets safer for Wall Street

Citigroup, one of the world’s largest banks, is stepping into the cryptocurrency space with plans to offer custody and payment services for stablecoins and crypto exchange-traded funds (ETFs). 

According to the latest report, this approach shows a growing acceptance of digital assets by traditional financial giants, following recent regulatory shifts in Washington. 

As big players like Fiserv and Bank of America also explore similar ventures, the financial landscape is rapidly evolving to embrace blockchain-based solutions.  

How Citigroup is Shaping the Future of Digital Finance

Stablecoins, which are digital tokens pegged to stable assets like the U.S. dollar, have surged in popularity, with around $250 billion already in circulation. However, their use has been mostly limited to crypto trading. 

Now, with clearer regulations requiring issuers to back these coins with secure assets like cash or U.S. Treasuries, banks like Citi see an opportunity. “Providing custody for these high-quality reserve assets is our first focus,” said Biswarup Chatterjee, Citigroup’s global head of partnerships and innovation. The bank’s services division, handling payments and cash management for corporations, is central to this strategy.  

But Citigroup isn’t stopping there. The bank is also looking at safeguarding digital assets that underpin crypto ETFs, a fast-growing sector. Since U.S. regulators approved spot bitcoin ETFs earlier this year, investment giants like BlackRock have launched products now worth billions. 

“These ETFs need reliable custody for the actual bitcoin they represent,” Chatterjee explained. Right now, Coinbase dominates this space, holding assets for over 80% of crypto ETF issuers. Citigroup’s entry could shake things up, offering institutional clients a trusted alternative.  

Speed is another factor driving Citi’s crypto ambitions. Traditional cross-border payments can take days, but blockchain-based transfers are near-instant. The bank already runs a 24/7 “tokenized” dollar payment system between New York, London, and Hong Kong. 

Now, it’s developing ways for clients to send stablecoins directly or convert them to dollars instantly. “We’re in talks with clients about real-world uses,” Chatterjee added. This could revolutionize how businesses handle international transactions, cutting costs and delays.  

The shift comes as U.S. regulators adopt a more crypto-friendly approach, a stark contrast to earlier skepticism. Under the Biden administration, policies have gradually opened doors for banks to engage with digital assets, provided they follow strict anti-money laundering and cybersecurity rules. 

Citigroup acknowledges these challenges, emphasizing that any crypto assets it custodies must be cleanly sourced and securely stored. “We need to ensure legitimacy upfront and protect against theft,” Chatterjee said.  

While Citigroup hasn’t confirmed launching its own stablecoin, the idea is on the table. If it happens, the bank could join the likes of PayPal and Circle in offering a regulated digital dollar alternative. 

For now, its focus is on building infrastructure that bridges traditional finance and crypto, a sign that digital assets are no longer a niche market but the next frontier for banking. As Chatterjee put it, “This is about meeting clients where the future of money is headed.” And with Citi’s muscle behind it, that future might arrive sooner than expected.

Institutions like JPMorgan Chase, Wells Fargo, Morgan Stanley, and Bank of America are actively exploring or developing stablecoin initiatives, aiming to reshape global payments. The GENIUS Act, recently passed, mandates full reserve backing for stablecoins, spurring banks to leverage their expertise in risk management to enter this $275 billion market. 

JPMorgan is testing tokenized deposit systems, while Wells Fargo pilots its Digital Cash for cross-border settlements. Morgan Stanley is evaluating stablecoin applications for wealth management clients, signaling broad institutional interest.

Beyond stablecoins, banks are eyeing crypto ETF custody, capitalizing on the success of bitcoin and Ethereum ETFs managed by firms like BlackRock. BNY Mellon and State Street are also stepping up, with roles in ETF administration and reserve custody for stablecoins like Ripple’s RLUSD. 

In an exclusive interview, former White House Crypto Council Executive Director Bo Hines stated that U.S. President Donald Trump’s Executive Order is a clear directive to establish a strategic Bitcoin Reserve.

This flurry of activity reflects a strategic pivot, as banks aim to capture market share from crypto-native players like Coinbase. With blockchain’s promise of faster, cheaper transactions, these banks are positioning themselves to redefine financial services, blending traditional reliability with digital innovation.