Citigroup looks to issue its own stablecoin to smooth payments
JPMorgan Chase announced plans earlier this year to pilot its own deposit token, JPMD, using Coinbase Global-affiliated public blockchain Base
[NEW YORK] Citigroup is considering issuing its own stablecoin, positioning the company as a possible early mover in the push by traditional banks to expand into cryptocurrencies.
“We are looking at the issuance of a Citi stablecoin,” chief executive officer Jane Fraser said on an earnings conference call with analysts on Tuesday (Jul 15), adding that the bank is also focused on tokenised deposits and custody for cryptoassets.
As landmark crypto regulation progresses in Congress and US regulators roll back Biden-era restrictions around banking the crypto industry, financial institutions such as Citigroup are increasingly expressing interest in minting their own tokens pegged to the US dollar.
“We really welcome the administration’s willingness to allow banks to participate in the digital asset space more easily,” Fraser said, citing US President Donald Trump’s Genius Act, a bill which offers a regulatory framework for stablecoin issuers. “Up until now, it has been hard for us to participate in a level playing field.”
The bank, which uses a deposit token system in its Citi Token Services network, is still considering further options for its external strategy, including joint efforts with other providers and third parties, Biswarup Chatterjee, global head of partnerships and innovation at Citi Services, said in an interview after Fraser’s comments.
“Nothing is off the table right now,” he said. “It’s the topic du jour right now, particularly among senior management.”
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Bank technology partners including Visa and Mastercard are stepping up to meet demand by offering platforms to help financial institutions mint US dollar-pegged tokens. JPMorgan Chase announced plans earlier this year to pilot its own deposit token, JPMD, using Coinbase Global-affiliated public blockchain Base.
Issuers including Circle Internet Group argue that stablecoins are a safer alternative to bank money since they are backed one to one by reserves typically held in short-term assets and cash, instead of being loaned out. However, some banks have expressed a preference for tokenised deposits, which could offer the programmability and 24/7 advantages of stablecoins, without moving payments outside of the banking ecosystem.
The desire to enter the sector is driven, in part, by an interest in protecting against the risk of deposit leakage in case a subset of consumers and businesses choose to hold their funds in stablecoin balances.
Fraser mentioned Citigroup’s plans on the same day its stock surged to its highest level since 2008. The bank posted second-quarter results that beat expectations and said it plans to buy back at least US$4 billion of shares in the third quarter. BLOOMBERG
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