Citi Eyes 2026 Crypto Custody Launch, Explores Stablecoins

Citi is poised to launch a cryptocurrency custody service in 2026, according to a senior executive, marking another significant step by a Wall Street titan into the digital asset sphere. This move signals a growing acceptance and integration of cryptocurrencies into traditional financial frameworks, driven by evolving regulatory landscapes and escalating client demand.

Biswarup Chatterjee, global head of partnerships and innovation within Citi’s services business, disclosed to CNBC that the bank has been actively developing its crypto custody capabilities for the past two to three years. This proactive approach aims to provide institutional clients with a secure and reliable solution for managing digital assets.

“We have various kinds of explorations … and we’re hoping that in the next few quarters, we can come to market with a credible custody solution that we can offer to our asset managers and other clients,” Chatterjee stated, emphasizing the imminent rollout of this service.

For years, traditional financial institutions have largely remained on the sidelines concerning cryptocurrencies like bitcoin and ether. However, recent policy shifts, including the GENIUS Act, have created a more defined regulatory environment for digital assets in the U.S. This clarification has paved the way for established financial players to introduce crypto-related products and services.

Crypto custody encompasses various models, ranging from exchanges holding digital coins to institutions opting for self-custody. Custodian services, like the one Citi is developing, allow banks to securely hold digital assets on behalf of their clients, similar to how they manage traditional assets like stocks. The emergence of specialized crypto custody firms also underscores the growing demand for these services.

Chatterjee confirmed that Citi’s upcoming custody service will involve holding the underlying cryptocurrencies directly. This approach requires robust security measures and adherence to stringent regulatory standards to safeguard client assets.

While all custody solutions carry inherent risks, such as cyberattacks, traditional banks offer a perceived advantage due to their established regulatory oversight and extensive experience in asset custody. This established framework provides clients with a level of trust and security that newer crypto-native firms may find difficult to match.

Citi is evaluating both internal technology development and strategic partnerships to deliver its custody solution. This hybrid approach allows the bank to leverage its existing infrastructure while incorporating cutting-edge technologies to enhance security and efficiency.

“We may have certain solutions that are completely designed and built in-house that are targeted towards certain assets and certain segment of our clients, whereas may we may use a … third party, lightweight, nimble solution for other kind of assets,” Chatterjee explained, keeping options open for a tailored approach.

However, not all Wall Street firms share the same enthusiasm for crypto custody. JPMorgan CEO Jamie Dimon stated earlier this year that while his bank will facilitate cryptocurrency purchases for clients, it will not offer custody services. This divergence in strategy highlights the varying risk assessments and strategic priorities within the financial industry regarding digital assets.

U.S. banks have recently launched several services incorporating cryptocurrencies and blockchain technology, focusing on efficiencies in payments and cross-border transactions.

JPMorgan has announced plans this year for a deposit token designed to represent commercial bank deposits digitally, facilitating fund transfers 24/7. This initiative aims to streamline payment processes and improve transaction speeds.

These deposit tokens leverage the Ethereum network. Similarly, Citi has developed Citi Token Services, which enables rapid cross-border money movement, even outside traditional banking hours. These developments underscore the growing adoption of blockchain technology to enhance global financial operations.

Banks increasingly view blockchain as a means to facilitate faster and more efficient global transactions, bypassing the limitations of traditional banking systems. The technology’s potential for reducing costs and increasing transparency is driving its adoption across the financial sector.

Stablecoins, another area of interest, are digital currencies typically pegged to a fiat currency like the U.S. dollar and backed by assets such as bonds to maintain value. Circle’s USDC and Tether’s USDT are among the largest commercial stablecoins. These assets provide a bridge between traditional finance and the crypto world.

Chatterjee indicated that stablecoins could be particularly useful in regions with less developed banking and payment infrastructure. As Citi’s clients expand into these markets, stablecoin-based solutions could provide a viable means for conducting business with local suppliers and customers.

“We do recognize the fact that there are these pockets in the world where you have a commercial need from our clients to be there and do business,” Chatterjee noted, highlighting the strategic importance of this technology.

The Citi executive noted the bank remains in the early stages of exploring stablecoins. Citi’s recent investment in stablecoin infrastructure firm BVNK demonstrates the bank’s commitment to understanding and potentially deploying this technology.

Bank of America CEO Brian Moynihan stated in July that his institution is also exploring the launch of stablecoins. Similarly, JPMorgan is actively evaluating this digital currency.

Scott Lucas, global head of markets digital assets at JPMorgan, told CNBC that the company is actively exploring digital currencies to better serve its clients. “There’s a real opportunity for us to think about how we can offer different services for our clients on the cash side, as well as responding to client demand to do things on stablecoins,” Lucas said. “And that strategy is still emerging, as you can understand, because it’s only really been a few months since we’ve had some more clear regulation around what the opportunity looks like.”