Citibank to Launch Crypto Custody Services in 2026 After 3 Years of Preparation
Citibank is making significant strides into the world of digital currencies, announcing plans to launch its crypto custody services in 2026, following three years of dedicated preparation. As the cryptocurrency landscape evolves, Citigroup is positioning itself at the forefront, alongside nine other global banks focusing on a G7-backed stablecoin. The market for digital payments is projected to soar to an astounding $50 trillion by 2030, making this move crucial for the bank and its clients.
Citibank’s Crypto Custody Plans
According to Biswarup Chatterjee, Citigroup’s global head of partnerships and innovation, the bank has been diligently developing its crypto custody offering for the past two to three years. Citibank aims to hold native cryptocurrencies on behalf of its clients, offering a robust solution for asset managers and institutional investors. Key highlights of Citibank’s strategy include:
– In-House vs. Third-Party Solutions: Citibank is evaluating both proprietary technology solutions and third-party partnerships. Chatterjee mentioned that the bank would potentially implement completely in-house designed solutions for certain assets and client segments, while third-party approaches might be utilized for other asset types.
– Flexible Custody Strategy: The institution remains open to various strategies concerning its custody services. This flexibility contrasts with the current stance of JPMorgan, which permits clients to purchase cryptocurrencies but stops short of holding custody of these assets.
Wall Street’s Growing Interest in Cryptocurrency
Citi’s ambitious pursuits in the digital asset sphere align with broader industry trends. Citigroup’s CEO, Jane Fraser, highlighted her vision for the bank, indicating ongoing efforts to issue a Citibank stablecoin and develop tokenized deposit services for corporate clients. These services aim to facilitate 24/7 settlement capabilities, catering to the growing demand for speed and efficiency in transactions. Notably, the bank has already begun offering blockchain-based dollar transfers across its New York, London, and Hong Kong offices, operating continuously around the clock.
Chatterjee also revealed that the bank is in active discussions with clients to explore the utility of stablecoins, assessing use cases for sending them between accounts or converting them into dollars for swift payments.
Collaboration Among Major Banking Institutions
In a notable industry move, nine leading banks, including Citigroup, Goldman Sachs, and Bank of America, announced a collaborative effort to develop a G7-focused stablecoin. This consortium aims to issue reserve-backed digital payment assets on public blockchains, with each unit pegged one-to-one to traditional fiat currency. Key aspects of this initiative include:
– Regulatory Engagement: The coalition has already initiated discussions with regulators across pertinent markets, emphasizing the seriousness of this venture.
– Implication of Stablecoin Usage: Bloomberg Intelligence has projected that stablecoins might facilitate over $50 trillion in annual payments by 2030, indicating an explosive growth trajectory for digital currencies.
Despite the optimistic outlook, existing banks face potential challenges from stablecoin adoption. Standard Chartered recently warned that stablecoins could siphon off over $1 trillion from emerging market banks by 2028, a concern that led the Bank of England to propose ownership caps on retail customers.
Balancing Opportunities and Risks
Citibank’s commitment to expanding its digital asset offerings comes with inherent risks. Analyst Ronit Ghose cautioned that interest payments from stablecoins could lead to a significant deposit flight, reminiscent of the 1980s when money market funds rapidly drained banks of deposits. Between 1981 and 1982, U.S. banking institutions experienced a stark outflow exceeding $32 billion due to consumers pursuing higher returns.
Major banking associations are urging Congress to amend the GENIUS Act, which enables crypto exchanges to offer yields on stablecoins. Treasury estimates suggest that yield-bearing stablecoins could produce a staggering $6.6 trillion in deposit outflows, fundamentally altering how banks manage liquidity and fund loans.
Citibank’s Digital Future
While there are warnings from analysts and traditional banking institutions, Citibank remains resolute in its strategy, framing it as a response to evolving client needs and the shift towards instantaneous settlement mechanisms. For Citibank, digital assets are not just an addition but represent a pivotal evolution in the digitization of payments, financing, and liquidity management.
With $2.57 trillion in assets currently under custody, Citibank’s planned crypto custody launch in 2026 sets the stage for a transformative era in Wall Street’s engagement with cryptocurrencies. As the institution embraces this burgeoning sector, it not only aims to capture market share but also to redefine how financial services innovate and respond in an increasingly digital economy.