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Investing.com -- Citigroup is looking into providing stablecoin custody and other services as major financial firms expand into cryptocurrency following policy changes in Washington, according to a report from Reuters.
The U.S. bank joins other traditional institutions including Fiserv and Bank of America that are considering moves into stablecoins after Congress passed legislation enabling these crypto tokens to be widely used for payments, settlement, and other services. Stablecoins are cryptocurrencies pegged to fiat currencies, typically the U.S. dollar.
"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 new law requires stablecoin issuers to maintain safe assets such as U.S. Treasuries or cash as backing for digital coins, creating opportunities for traditional custody banks to provide safekeeping and administration services.
According to a McKinsey study, approximately $250 billion in stablecoins have been issued so far, primarily used for settling cryptocurrency trades. While Citigroup mentioned last month it was considering issuing its own stablecoin, this marks the first disclosure of its broader digital asset plans.
Citi is also exploring custody services for digital assets backing crypto-related investment products, including ETFs tracking bitcoin prices. The largest bitcoin ETF, BlackRock’s iShares Bitcoin Trust, has around $90 billion in market capitalization.
"There needs to be custody of the equivalent amount of digital currency to support these ETFs," Chatterjee noted.
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