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Citigroup is weighing a deeper move into digital assets, including providing custody for the safe assets backing stablecoins and facilitating stablecoin-based payments, as new U.S. legislation accelerates mainstream adoption of blockchain-based financial tools.
The bank joins a growing list of traditional institutions exploring stablecoins following the passage of a federal law that requires issuers to hold high-quality assets, such as U.S. Treasuries or cash, to back their tokens. The law also introduced reserve disclosure requirements, a framework that supporters say could help integrate stablecoins into payment and settlement systems with stronger consumer protections.
“Providing custody services for those high-quality assets backing stablecoins is the first option we are looking at,” said Biswarup Chatterjee, global head of partnerships and innovation for Citigroup’s services division. The services unit, which includes treasury, cash management, and payments for corporate clients, is a core part of the bank’s operations and remains central even as Citi undergoes broader restructuring.
A McKinsey & Co. study estimates that about $250 billion in stablecoins have been issued to date, with most currently used to settle cryptocurrency trades. The new law could expand their role into cross-border payments, business-to-business transactions, and consumer remittances, areas where traditional settlement can take days.
Citigroup is also considering custody for other digital assets that underpin crypto-related investment products, such as exchange-traded funds (ETFs) tied to bitcoin. Since the U.S. Securities and Exchange Commission began approving spot bitcoin ETFs last year, major asset managers have entered the space. The largest, BlackRock’s iShares Bitcoin Trust, has a market capitalization of about $90 billion.
“There needs to be custody of the equivalent amount of digital currency to support these ETFs,” Chatterjee said. At present, Coinbase is the dominant custodian for crypto ETFs, serving more than 80% of issuers.
Beyond custody, Citi is exploring payment capabilities using stablecoins. The bank already operates “tokenized” U.S. dollar payments on a blockchain network that allows 24-hour transfers between accounts in New York, London, and Hong Kong. The next step could involve letting clients send stablecoins between accounts or instantly convert them into dollars for settlement.
Such systems could reduce friction in international transfers, which often face multiple layers of compliance checks and currency controls. Chatterjee noted that any expansion into stablecoin payments would still need to comply with anti-money laundering regulations and cybersecurity safeguards to prevent misuse or theft.
Just a few years ago, large U.S. banks faced significant regulatory skepticism about entering the crypto market. That posture has shifted under the Trump administration, which has adopted a more industry-friendly stance. The stablecoin law in particular is seen as a turning point, providing clearer rules for both fintech companies and traditional banks to operate in the space.
For Citigroup, the move could align with a broader strategy to position itself as a global intermediary for both conventional and digital finance. But the opportunity is not without risks. Even with asset backing and compliance requirements, stablecoins remain part of a volatile and fast-evolving sector.
Industry analysts say the entrance of major banks into stablecoin custody and payments could accelerate the integration of blockchain into mainstream finance. But they also warn that the U.S. must decide whether it will set the standards for this emerging infrastructure or adapt to rules established elsewhere.
That broader strategic concern is central to the mission of the America First Technology Infrastructure & Innovation Institute, a nonpartisan forum that advocates for U.S.-anchored digital financial systems.
Its Executive Director of Strategy, Igor Volovich, sees Citigroup’s plans as part of a larger race to define the architecture of the next economy.
“America thrives when innovation reflects our values: openness, accountability, and opportunity for all,” Volovich said. “If U.S. institutions are going to hold and move the assets that back stablecoins, we have a chance to hard-code those values into the infrastructure itself.”
Volovich argues that the new law is a starting point, not an endpoint. The frameworks that emerge now, from reserve standards to cross-border transfer protocols, will determine not only market efficiency but also who controls the levers of digital commerce.
“This is a moment to bring policymakers, builders, and economists together — to shape the foundational systems that will support a more resilient, inclusive, and secure American economy for generations to come,” he said.
Citigroup’s exploration of stablecoin services illustrates the rapid convergence between traditional finance and digital assets, spurred by regulatory clarity. If banks like Citi enter the market with robust compliance and security measures, they could bring stablecoins from the edges of crypto trading into the center of global payment systems.
For Volovich, that transition is exactly why the U.S. must move quickly. “We can lead in designing the economic infrastructure of tomorrow — by design, not by default,” he said. “If we wait, someone else will set the rules, and we will be left adapting to systems built on values that are not our own.”
As stablecoins move from speculative tools to everyday payment rails, the question may not be whether they will become part of the financial mainstream, but whether America will be the one to define how they work.
