Policy Breakthrough! New US Cryptocurrency Bill Influxes Traditional Financial Institutions, with Citigroup Entering the Stablecoin Custody Market

According to Zhitong Finance APP, a Citigroup (C.US) executive has reportedly revealed that the bank is exploring stablecoin custody services. This development suggests that major shifts in the US policy environment are driving mainstream financial institutions to accelerate their expansion into cryptocurrency businesses.

After the US Congress passed legislation paving the way for the payment and settlement applications of crypto tokens, Citigroup joined traditional financial institutions such as Fiserv Financial Services (FI.US) and Bank of America (BAC.US) in entering the stablecoin space. Stablecoins are cryptocurrencies pegged to fiat currencies (usually the US dollar) or other assets. The new legislation requires stablecoin issuers to hold safe assets such as US Treasury bonds or cash as reserves, creating business opportunities for traditional custodian banks in asset custody and management.

"We are first considering providing custody services for stablecoin reserve assets," Biswarup Chatterjee, head of global partnerships and innovation at Citigroup's Services Division, said in an interview. As a core business unit of Citigroup, the division provides comprehensive financial services such as treasury management, cash management, and payment and clearing to large enterprises. Citigroup is currently undergoing a major strategic restructuring.

A McKinsey study shows that the current global issuance of stablecoins is approximately $250 billion, but is primarily used for cryptocurrency transaction settlement. Although Citigroup revealed last month that it was considering issuing its own stablecoin, it has never previously disclosed the full scope of its digital asset strategy .

The bank is also exploring custody solutions for the underlying assets of cryptocurrency investment products. Since the SEC approved a Bitcoin spot ETF last year, asset management giants such as BlackRock have launched related products. The largest Bitcoin ETF, iShares (IBIT.US), has a market capitalization of $90 billion. "These ETFs require custody support equivalent to the digital currency," Chatterjee noted. Currently, the sector is dominated by cryptocurrency exchange Coinbase (COIN.US) , a spokesperson for which stated that it provides custody services for over 80% of cryptocurrency ETFs.

In terms of payment innovation, Citi is testing the use of stablecoins to improve the efficiency of cross-border payments, which usually take days to complete in the traditional banking system. The bank has launched a 24-hour blockchain-based dollar "tokenized" payment system that connects accounts in New York, London, and Hong Kong. Chatterjee revealed that it is developing a service solution that supports stablecoin transfers and real-time redemption between customer accounts and has already started consultations with customers on specific application scenarios.

As the Trump administration promotes cryptocurrency-friendly policies, US banking and securities regulators, once cautious about traditional financial institutions entering the volatile cryptocurrency market, have now shifted to a more open stance. However, Chatterjee emphasized that institutions like Citigroup must still comply with anti-money laundering and foreign exchange control regulations in various countries, ensure the legal source of funds when handling cryptocurrency assets, and strengthen cybersecurity and operational risk management systems. The bank is also evaluating the feasibility of issuing its own stablecoin.