Citi is set to introduce a cryptocurrency custody service by 2026, marking a significant venture for the financial giant as it joins other Wall Street institutions in exploring the digital asset space. This move comes in response to a more accommodating regulatory environment in the U.S., which has emboldened banks to delve into bitcoin and other cryptocurrencies.
Biswarup Chatterjee, the global head of partnerships and innovation for Citi’s services division, expressed confidence in this new offering, revealing that the bank has been working on the custody service for more than two years. He indicated that it is expected to launch within the next few quarters. The custody service will enable Citi to hold native bitcoins and other cryptocurrencies on behalf of its clients, positioning the bank as a key player among leading custodians of traditional financial assets.
Chatterjee highlighted that Citi may develop in-house solutions tailored to specific assets and client segments, while also considering partnerships with agile third-party providers for other types of assets. This balanced approach underscores Citi’s strategy to deliver comprehensive services in the evolving digital asset landscape.
Recent insights from Citigroup analysts project a bullish outlook for bitcoin, with a target price of $181,000 in the next year and a revised estimate of $132,000 by the end of this year. This optimistic forecast is backed by significant inflows, totaling approximately $7.5 billion, and increased demand from institutional investors. The analysts noted that bitcoin is attracting a majority of new capital entering the cryptocurrency markets, suggesting a strong potential for growth supported by favorable regulatory developments.
Custody services, which ensure the safekeeping of client assets, remain a fundamental and complex aspect of institutional cryptocurrency adoption. While leading financial institutions like JPMorgan have opted not to directly hold clients’ cryptocurrencies, the rise of specialist firms such as Anchorage and BitGo has filled the gap. However, traditional banks like Citi see an opportunity to provide regulated custody alternatives, leveraging their extensive experience in safeguarding securities.
Citi’s initiative in cryptocurrency custody aligns with its broader efforts in blockchain technology, including the Citi Token Services that facilitate real-time cross-border payments using tokenized deposits. Additionally, the bank is exploring the potential of stablecoins—digital tokens typically pegged to fiat currency—as viable tools for facilitating global trade and payments, particularly in regions with underdeveloped financial infrastructures.
Other financial institutions are also making strides in the digital asset space. For instance, JPMorgan is developing a deposit token, and Bank of America is reportedly working on a stablecoin product, highlighting a notable trend among banks to integrate cryptocurrency solutions into their offerings.
