Citigroup eyes stablecoin custody as institutional demand rises
Citigroup is evaluating stablecoin custody and crypto asset services amid rising institutional demand and clearer regulation. The bank aims to safeguard high-quality reserves backing stablecoins and crypto ETFs. Biswarup Chatterjee, Citi’s global head of partnerships and innovation, said stablecoin custody is the first focus. Citi is also exploring stablecoin payment networks, instant dollar conversions and may issue its own stablecoin. This move aligns with new U.S. legislation promoting stablecoin use in payments.
Stablecoin custody interest coincides with a net inflow of $3.79 billion into stablecoins this week, lifting the market cap to $273.49 billion. Tether (USDT) dominates with a 60.42% market share. The sustained capital flow reflects growing institutional adoption and underscores demand for secure custody solutions.
Meanwhile, Hong Kong’s Monetary Authority and Securities and Futures Commission warned investors against unverified licensing claims in the stablecoin market. Regulators stressed that social media hype does not equate to formal approval and pledged action on misleading statements. This regulatory oversight is expected to bring market clarity and further support institutional confidence.
Bullish
Citigroup’s exploration of stablecoin custody signals growing institutional confidence in the digital asset space. By offering secure reserve management for stablecoins and ETFs, a major bank can boost liquidity and trust, fostering further institutional investment. Similar moves by traditional finance firms, like BlackRock launching a Bitcoin ETF, drove market rallies. Hong Kong’s regulatory warning also supports a more transparent environment, reducing misinformation and potential volatility. In the short term, this news may spur increased trading volume in stablecoins and related assets. In the long term, the establishment of custody services and clearer regulations can underpin sustainable growth, potentially encouraging other financial institutions to enter the market. Overall, these developments point to a bullish outlook for the crypto market.