Citi eyes stablecoin and crypto ETF custody amid push for Blockchain payments

Citigroup, the $2.57 trillion banking giant, is preparing to step into the digital asset arena, signaling a potential transformation of how traditional banks engage with cryptocurrency. Speaking to Reuters, Biswarup Chatterjee, Citi’s global head of partnerships and innovation, outlined the bank’s interest in providing custody for the high-quality assets backing stablecoins and supporting crypto ETFs.

Citi plans major expansion into digital asset services

The move comes as stablecoins transition from purely crypto trading tools to mainstream payment and settlement instruments. McKinsey estimates that around $250 billion in stablecoins have been issued, with adoption largely concentrated within the crypto ecosystem. Citi sees new legislation, including the GENIUS Act, as a pathway to mainstream acceptance.
Under the GENIUS Act, stablecoin issuers must hold secure assets like U.S. Treasuries or cash to back their tokens, creating opportunities for traditional banks to offer custody services. Providing custody services for those high-quality assets backing stablecoins is the first option looking at.

Stablecoin custody, issuance, and instant payments

Citigroup is also considering issuing its own stablecoin, confirmed by CEO Jane Fraser during the bank’s Q2 earnings call. Beyond stablecoins, the bank is examining custody for crypto ETFs, a market growing rapidly since the SEC approved spot bitcoin ETFs last year. Currently, Coinbase dominates ETF custody, serving more than 80% of issuers, but Citi’s entry could reshape the landscape.

On the payments front, Citigroup is already enabling 24/7 “tokenized” U.S. dollar transfers between accounts in New York, London, and Hong Kong. Plans are underway to let clients transfer stablecoins between accounts or instantly convert them into dollars for seamless payments. “Digital assets are the next evolution in the broader digitization of payments, financing, and liquidity,” Fraser said.

Regulatory considerations and institutional impact

While regulators have become more accommodating, Citi must comply with anti-money laundering and international currency controls. Custody operations require robust security and verification to ensure assets are legitimate.

Meanwhile, U.S. banking trade groups are urging Congress to bar stablecoin issuers’ affiliates from paying interest to token holders, warning that yield programs could drain bank deposits and limit lending capacity. Treasury estimates suggest interest-bearing stablecoins could trigger up to $6.6 trillion in deposit outflows.

Despite regulatory caution, the stablecoin market continues to expand rapidly. Supply grew from $204 billion to $252 billion in early 2025, driven by USDT, USDC, and platforms like PayPal and Coinbase offering yield programs. Ripple CEO Brad Garlinghouse predicts the market could reach $2 trillion as institutional adoption rises.

With $2.57 trillion in assets under custody, Citigroup’s foray into stablecoins, crypto ETFs, and blockchain-based payments could redefine the interface between traditional finance and the digital asset economy.